Yen Weakens on Fed Rate Hike Expectations
The Japanese yen weakened toward 159 per dollar on Wednesday, approaching a two-month low as the US dollar strengthened following hawkish comments from Federal Reserve officials and stronger-than-expected US inflation data. Markets are now assigning approximately a 91% probability to a Fed rate hike next month, up from 84% a day earlier, while additional increases in January and potentially April are also being factored in. The yen remained under pressure despite increasingly hawkish signals from the Bank of Japan, as policymakers broadly agreed that interest rates should continue moving higher, with underlying inflation reaching levels generally consistent with the central bank’s 2% price stability target. BOJ Chief Economist Seisaku Kameda also indicated on Monday that the central bank is likely to raise interest rates in December and continue its monetary tightening cycle into next year.
The Japanese yen weakened toward 159 per dollar on Wednesday, approaching a two-month low as the US dollar strengthened following hawkish comments from Federal Reserve officials and stronger-than-expected US inflation data. Markets are now assigning approximately a 91% probability to a Fed rate hike next month, up from 84% a day earlier, while additional increases in January and potentially April are also being factored in.
The yen remained under pressure despite increasingly hawkish signals from the Bank of Japan, as policymakers broadly agreed that interest rates should continue moving higher, with underlying inflation reaching levels generally consistent with the central bank’s 2% price stability target. BOJ Chief Economist Seisaku Kameda also indicated on Monday that the central bank is likely to raise interest rates in December and continue its monetary tightening cycle into next year.