The yen rebounded in New York for the first time in five trading days, settling in the low ¥159s as expectations of a BOJ rate hike in September and weak U.S. data came into focus.
The yen rebounded in the New York market on the 14th, ending trading at ¥159.30–¥159.40 per dollar, up 20 sen from the previous day. Expectations that the BOJ could raise rates as early as September, along with a decline in U.S. retail sales, heightened awareness of a narrowing interest-rate gap between Japan and the United States, prompting buying of the yen and selling of the dollar.
The yen strengthened to ¥158.60 at one point, but gains were capped by an increase in long-term U.S. Treasury yields, and it settled in the low ¥159s. The euro continued to decline against the yen, while reaching its highest level against the dollar in about two months.
Expectations of a BOJ rate hike supported the yen, and yen buying resumed in the afternoon. Some market participants viewed the reaction as temporary, and the market move following BOJ-related reports was limited.
U.S. retail sales fell 0.6% in July, below market expectations of an increase, while sales excluding the volatile auto-parts category fell 0.3%. Some observers said expectations of a Federal Reserve rate hike had receded, while higher oil prices and other factors at times pushed up long-term U.S. Treasury yields.