Yen Surge Continues Ahead of FOMC Meeting on Rate Hikes
The Japanese yen has gained strength against the US dollar on Friday and is on track for its strongest week in over a month. Traders are betting on a Bank of Japan interest rate hike, with some analysts saying this reflects a more hawkish BOJ path than previously expected. The yen has strengthened to as much as 155.25 per dollar, just off the 155.20 high it hit last month after the July intervention.
According to Masahiko Loo, senior fixed income strategist at State Street Investment Management in Tokyo, 'This feels less like a short squeeze and more like the market cautiously reassessing a more hawkish BOJ path.' Markets are buying into the idea that Japan may continue normalising policy into 2027.
The dollar index was flat at 99.01, with the euro and sterling also steady. Attention now shifts to key data releases ahead of the FOMC meeting on September 15-16, including nonfarm payrolls later and CPI inflation next week.