Markets price in an 80% chance of a Bank of Japan rate increase at its September meeting amid inflation concerns.
The US dollar fell against all major currencies in early North American trading, led by a 0.62% rise in the New Zealand dollar. The yen gained 0.22% as speculation grew over a potential Bank of Japan rate hike in September, with markets pricing an 80% probability of tightening at the upcoming meeting.
Recent BOJ policy adjustments have occurred roughly twice a year, but rising inflation and yen weakness are accelerating expectations for faster action. The dollar-yen pair initially dropped to 159.15 before partially recovering, reflecting shifting sentiment.
EUR/USD and GBP/USD also advanced, with the euro up 0.35% and sterling rising 0.39%. The Canadian dollar followed closely, climbing 0.37% against the greenback.