Yen Surges on BOJ Hike Bets, Dollar Weakens Amid Waller Comments

The Japanese yen surged over 2% against the US dollar on Thursday as investors increasingly bet that the Bank of Japan will raise interest rates in its upcoming meeting.

This move has been fueled by recent hawkish comments from BOJ board member Hajime Takata, who emphasized the need for interest rate hikes to counter intensifying inflationary pressures. Market pricing now suggests a 75% chance of a 25-basis-point hike this month, with some traders speculating that an even larger increase is possible.

The dollar suffered losses as Federal Reserve Governor Christopher Waller commented that he would be inclined to keep interest rates steady if upcoming data confirms cooling inflation pressures. This has led to a decrease in bets on a September rate hike from 59% to 48%. The dollar index fell 0.69% to 98.91.