Yen Rockets Past 7-Month High on BOJ Hike Bets and Repatriation

The Japanese yen has reached its strongest level against the US dollar in seven months, surpassing levels seen during Japan's July intervention. The currency strengthened to as much as 153.53 per dollar in morning trading, with a gain of nearly 4% from around 160 yen per dollar early last week.

Analysts attribute this shift to growing bets of a Bank of Japan interest-rate hike and the potential for Japanese investors to repatriate their funds, unwinding carry trades. Market analyst Tony Sycamore noted that the drop in the yen looks like a sharp unwind of short positions after breaking below critical supports around 155 levels seen in August.

The dollar index was weaker at 98.83 amid yen strength, while the euro and sterling remained relatively stable. However, market focus now shifts to US inflation readings this week, with traders pricing a roughly 60% chance of a Federal Reserve rate hike following Friday's stronger-than-expected nonfarm payrolls report.