The yen has maintained its gains against the dollar, trading in the mid-¥155 range. With expectations of an additional BOJ rate hike and the release of US jobs data ahead, market expectations are shifting.
In morning trading, the yen rose to ¥155.25 per dollar, approaching the high reached after the currency intervention in July, before trading back around ¥155.71 per dollar. The yen is expected to gain approximately 2.5% on the week, potentially marking its biggest move since the coordinated currency intervention at the end of July.
Market expectations are growing that the BOJ will adopt a more hawkish stance at its monetary policy meeting on 17-18 September, with analysts describing the move as closer to a reassessment of the policy path than to the unwinding of short-term positions. Some observers also say the market is beginning to price in Japan's monetary normalization.
The US Dollar Index is trading near 99.01, the euro around $1.1625 and the pound around $1.3527, while employment and inflation data ahead of the FOMC are being closely watched. Following comments from Governor Waller, views are spreading that the probability of a September rate hike has fallen to around 50%.
Oil prices moved following reports that the United States attacked Iran, while geopolitical risks in the Persian Gulf are also affecting the yen-dollar exchange rate. Japanese and US economic data, along with geopolitical risks, are expected to continue shaping the yen's movements.