Yen Surges to Fresh Seven-Month High Amid Interest-Rate Hike Bets
The Japanese yen has surged to a fresh seven-month high against the US dollar, driven by bets of a Bank of Japan interest-rate hike and the potential for Japanese investors to repatriate their funds. The yen strengthened to as much as 153.53 per dollar in morning trading on Tuesday, surpassing levels reached during Japan's July intervention and hitting its strongest since February.
The yen's 1.2% jump during a thin session on Monday amid a US holiday has firmed nearly 4% from around 160 yen per dollar early last week. Traders and analysts attribute the yen's rally to a slew of factors, including bets on faster Bank of Japan tightening and the potential for Japanese investors to unwind carry trades.
The dollar index was weaker at 98.83 amid yen strength, leaving the euro and sterling both 0.06% stronger. Market focus now shifts to US inflation readings this week, with traders pricing a roughly 60% chance of a Federal Reserve rate hike this month following Friday's stronger-than-expected nonfarm payrolls report.