Forex News: Yen Rises Amid BoJ Rate Hike Expectation

Yen Rises Amid BoJ Rate Hike Expectation

(RTTNews) - The Japanese yen strengthened against other major currencies in the Asian session on Thursday, as the Bank of Japan (BoJ) raised its inflation outlook in July and kept the door open for an imminent interest rate hike by the end of current year.

Optimism over the outlook for interest rates, with the US Fed widely expected to lower rates by a least a quarter point next month, also led to the surge of safe-haven JPY.

U.S. Treasury Secretary Scott Bessent wants the Fed to keep the door open to a larger, 50 basis point rate cut next month following recent weak US jobs data.

CME Group's FedWatch Tool is currently indicating a 93.8 percent chance the Fed will cut rates by 25 basis points in September.

US President Donald Trump also continues to pressure Fed Chair Jerome Powell to lower rates and recently threatened to allow a "major lawsuit" to proceed against him over renovations at the Fed's headquarters.

US Treasury Secretary Scott Bessent attacked the BoJ's attitude on inflation, saying that the Japanese central bank is "behind the curve" and needs to boost rates to keep pricing pressures under control, Bloomberg reported on Thursday.

Traders await the U.S. Producer Price Index to be released later in the day, coupled with remarks from key FOMC members.

Meanwhile, investors also predict the possibilities for additional BoJ rate hikes could be postponed due to concerns about the consumption-led recovery, internal political unpredictability, and rising US tariffs.

In the Asian trading today, the yen rose to a 1-week high of 171.34 against the euro, a 3-day high of 198.72 against the pound, a 3-week high of 146.36 against the U.S. dollar and a 9-day high of 181.75 against the Swiss franc, from yesterday's closing quotes of 172.32, 199.87, 147.12 and 182.81, respectively. If the yen extends its uptrend, it is likely to find resistance around 170.00 against the euro, 196.00 against the pound, 144.00 against the greenback and 178.00 against the franc.

Against the Australia, the New Zealand and the Canadian dollars, the yen advanced to a 6-day high of 95.88, a 1-week high of 87.46 and more than a 1-month high of 106.38 from Wednesday's closing quotes of 96.38, 87.98 and 106.99, respectively. On the upside, 94.00 against the aussie, 85.00 against the kiwi and 104.00 against the loonie are seen as the next resistance levels for the yen.

Looking ahead, Eurostat publishes euro area flash GDP and employment figures for the second quarter are due to be released at 5:00 am ET in the European session. The preliminary flash estimate showed that the currency bloc grew 0.1 percent after rising 0.6 percent in the first quarter.

In the New York session, U.K. NIESR monthly GDP tracker for July, U.S. PPI data for July and weekly jobless claims data are slated for release.

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