Yen Weakens Despite Tokyo Inflation Surpassing Target

The Japanese Yen weakened for a fifth consecutive session despite Tokyo inflation excluding food and energy reaching 2% in August, exceeding the Bank of Japan's target.

The USD/JPY pair pressed the 160.00 handle at its session high, while five-year Japanese government bond yields printed a record high on speculation of an interest rate hike by the BoJ in September.

A majority of investors now expect a quarter-point increase from the Fed on September 16, which could widen the gap between US and Japan's policy rates to over 250 basis points.

The only scenario that would strengthen the Yen is if the Bank of Japan raises interest rates while the Federal Reserve keeps its rate unchanged.