Market confidence in a September BoJ rate hike reaches 80% but fails to lift the Yen as weak GDP data weighs on sentiment.
The Japanese Yen trades near 159.50 against the US Dollar in early Asian trading, remaining close to a two-week low despite growing bets on a Bank of Japan rate hike. Markets price an 80% chance of a 25-basis-point increase at the September meeting, according to MUFG analysts, who note that softer US data may curb further Yen declines.
Japan’s preliminary Q2 GDP growth missed expectations, rising 0.3% quarter-on-quarter versus a 0.5% consensus forecast. The weaker-than-expected print, driven by net exports and government spending, contrasts with the BoJ’s hawkish signals, including calls from some board members for faster monetary tightening due to inflation risks.
Analysts suggest the firm rate-hike pricing could stabilize the Yen in the near term, though downside risks persist amid Japan’s uneven economic recovery.