Traders remain unconvinced by the Bank of Japan’s policy shift, as the yen weakens despite expectations of further rate hikes by October.
The Japanese yen continues to struggle despite the Bank of Japan’s recent rate hike and hawkish policy meeting minutes. Even as equities retreat amid risk aversion, the currency shows little resilience, raising concerns about its outlook.
The BOJ’s June meeting minutes revealed growing support for additional rate hikes, with some members advocating for increases as soon as September or October. Markets are now pricing in around 16bps of hikes by October, yet the yen remains under pressure. Analysts note the central bank’s reduced concerns over growth risks and heightened focus on inflation.
Despite these signals, traders appear skeptical of a material shift in BOJ policy, leaving the yen vulnerable. Pressure for intervention to support the currency has intensified after the latest measures failed to reverse its weakening trend.