Money markets now price an 84% chance of a Bank of Japan rate increase by October after June’s hike to 1.0%.
The USD/JPY pair fell to near 163.10 in early Asian trading Thursday as traders priced in heightened odds of a Bank of Japan rate hike. The central bank’s June move to 1.0% and hawkish signals lifted October rate hike probabilities to 84% from 72% earlier this week.
Japan’s Finance Minister warned of potential intervention, reiterating readiness for “appropriate and bold action” if needed. The yen remains near a four-decade low, pressured by fiscal concerns and geopolitical risks, including escalating Middle East tensions.
Markets are balancing BoJ policy shifts against broader USD strength, with overnight-index swaps reflecting growing expectations for tighter monetary conditions in Japan.