Yen Weighed Down by Expectations of Higher US Rates

The Japanese yen has been trading near its one-month low as the dollar strengthened following Federal Reserve Chair Kevin Warsh's hawkish remarks.

Warsh's comments boosted expectations for a US rate hike in September, with markets now pricing in around a 57% chance of a 25 basis points increase next month. This is up sharply from about 40% a week ago.

Traders are also betting on a potential Bank of Japan rate increase in September due to concerns over yen weakness and import-driven inflation.

The yen has retraced more than half of its gains following the joint Japan-US currency market intervention in late July, with persistent structural weakness continuing to weigh on the currency.