Yen Weakens as Dollar, Treasury Yields Weigh
The Japanese yen weakened past 158 per dollar on Thursday, reversing recent gains as the dollar and Treasury yields continued to rise amid expectations that the Federal Reserve may need to raise interest rates further to contain energy-driven inflation. The Japanese currency also remained under pressure from wide US-Japan interest-rate differentials, as expectations for further Fed tightening continued to outweigh the Bank of Japan’s rate hikes. However, softer-than-expected US PCE inflation data prompted traders to reduce bets on a Fed rate hike in October. In Japan, a summary of opinions from the BOJ’s September meeting showed that policymakers saw a need to accelerate the pace of rate hikes or bring them closer to the central bank’s target in the near term. Meanwhile, traders remain alert to the possibility of currency intervention as Japanese authorities have stepped up verbal warnings in recent sessions.
The Japanese yen weakened past 158 per dollar on Thursday, reversing recent gains as the dollar and Treasury yields continued to rise amid expectations that the Federal Reserve may need to raise interest rates further to contain energy-driven inflation. The Japanese currency also remained under pressure from wide US-Japan interest-rate differentials, as expectations for further Fed tightening continued to outweigh the Bank of Japan’s rate hikes. However, softer-than-expected US PCE inflation data prompted traders to reduce bets on a Fed rate hike in October.
In Japan, a summary of opinions from the BOJ’s September meeting showed that policymakers saw a need to accelerate the pace of rate hikes or bring them closer to the central bank’s target in the near term. Meanwhile, traders remain alert to the possibility of currency intervention as Japanese authorities have stepped up verbal warnings in recent sessions.