Yen Weakened Amid BoJ Hike Expectations, Weak Japan Growth

The Japanese Yen is trading near its two-week low against the US Dollar, hovering around 159.50. Despite expectations of a Bank of Japan rate hike at its September meeting, markets are pricing an 80% chance of a 25 basis point increase. Analysts note that this strong probability combined with softer US data should help curb further Yen weakness.

Japan's Q2 GDP growth was weaker than expected, rising just 0.3% quarter-over-quarter. This disappointment poses a potential drag on aggressive BoJ hawkish positioning. However, the central bank still seems set to tighten monetary policy in the near term.

Investors are focused on upcoming FOMC minutes from the Federal Reserve's July meeting, where the Fed kept rates at 3.50%-3.75%. Market participants will scrutinize the minutes for new insights on inflation dynamics and the broader economic outlook.