As of 12:00 p.m. on 8 September, the dollar-yen rate had moved into the ¥152 range as the yen strengthened, reaching a level not seen in about six months. US-Japan intervention is not currently viewed as likely. The background includes a lack of significant change in expectations for US rate hikes, alongside growing expectations for a BOJ rate hike.
The dollar-yen rate moved toward a weaker yen through late August, but as of 12:00 p.m. on 8 September, the yen had strengthened to the ¥152 range per dollar. Market sentiment has broadly shifted toward viewing the possibility of intervention as low. The background includes indications that expectations for US rate hikes have not changed significantly, while the interest-rate differential between Japan and the US is narrowing.
One factor behind the yen's strength is growing expectations for a BOJ rate hike. Comments by BOJ board member Takata (高田) indicating support for accelerating the pace of rate hikes, among other developments, strengthened market pricing for the number of rate hikes expected by year-end. Some market participants believe that more than 1.8 rate hikes are priced in for this year, based on interest rates.
Views on US monetary policy have recently diverged, with both the likelihood of a rate hike and the likelihood of no hike at the September FOMC being reflected in the market. Some analysts say that slowing wage growth and rent inflation could lead to lower US interest rates and a weaker dollar, supporting further yen strength.