USD/JPY rises above 159.00 as weak Q2 GDP and surging bond yields erode confidence in Japan’s rate hike plans.
The Japanese Yen weakened after Q2 preliminary GDP data and rising Japanese Government Bond (JGB) yields raised doubts about the Bank of Japan’s ability to sustain tighter policy. USD/JPY traded above 159.00, reversing earlier intervention gains.
Markets had priced in a rate hike as necessary for defending the Yen, but the latest data undermined credibility. JGB yields signaled deeper skepticism, while iFlow data showed persistent JPY outflows, averaging 0.86 daily since July 30.
Selling pressure eased slightly in the past week as positioning turned underheld for the first time since late 2024, though current holdings remain volatile.