On the 2nd, the yen surged, briefly reaching the ¥158.20 range in New York. Expectations for a Bank of Japan rate hike increased, while concerns about intervention continued to simmer.
The yen surged in New York trading on the 2nd, briefly reaching the ¥158.20 range per dollar. After the yen had weakened to the low ¥160s the previous day, the unwinding of long-dollar positions led to a yen gain of more than ¥2.
Expectations for consecutive rate hikes spread through the market after Policy Board member Takada Hajime (高田創) suggested that the Bank of Japan could respond flexibly to the pace of rate increases, while Governor Ueda Kazuo (植田和男) stressed that the issue would be discussed at every meeting. This raised expectations that the BOJ could bring forward its gradual normalization path.
In Tokyo trading, the yen rebounded for the first time in 5 business days, rising to the mid-¥159s as of 5 p.m. The yen also strengthened against the euro, with the euro trading in the low ¥184s.
Geopolitical risks and trends in US employment indicators remain factors limiting the yen’s upside. Concerns over a US-Iran military conflict and higher oil prices are encouraging dollar buying, while contacts between Japanese and US monetary policy officials continue amid renewed concerns about intervention.