The yen was rapidly bought back, sending USD/JPY into the upper 155 range. With the US interest-rate outlook and expectations for BOJ rate hikes pulling in opposite directions, next week’s US CPI report and BOJ meeting will be the focus.
The yen was rapidly bought back, pushing USD/JPY into the upper 155 range as the yen strengthened. Fed Governor Waller suggested that the policy rate could be kept unchanged if inflation continued to slow, reducing expectations for further US rate hikes. Expectations for a faster pace of BOJ rate hikes, comments by Policy Board Member Takata (高田) suggesting consecutive rate hikes, and speculation over a review of GPIF’s policy asset mix also supported yen buying. Next week, the August US CPI report and the BOJ Monetary Policy Meeting will be the focus, with the possibility of larger and consecutive rate hikes likely to influence the market.
For USD/JPY next week, the August US CPI report and the BOJ meeting will be the main focus. The market expects year-on-year CPI growth of around 3.4%, and if persistent inflationary pressure is confirmed, dollar buying could resume. A 0.25% BOJ rate hike is already priced in, but if the central bank signals an increase to 0.50% or consecutive rate hikes, pressure for yen appreciation could intensify. The euro is expected to be influenced by the ECB Governing Council meeting and German state parliamentary elections, and its direction will be closely watched.