USD/JPY rebounded to the ¥159 range after undergoing a period of sharp volatility in August, while the merits of consecutive BOJ rate hikes and upcoming economic indicators have become the focus. Events including US CPI, the FOMC minutes and the Jackson Hole symposium are expected to provide market direction from this week onward.
USD/JPY plunged to the mid-¥156 range at the beginning of August before rebounding to the ¥159 range amid the effects of intervention, while market attention also focused on the effectiveness of intervention around the ¥162 level. The view is gaining ground that whether consecutive BOJ rate hikes materialize will influence the formation of the long-term trend.
US CPI came in below expectations, supporting equity markets on the view that expectations for additional Fed rate hikes would recede. Japanese stocks extended their gains as domestic-demand, AI and semiconductor-related names attracted buying, while the yen market was marked by the dollar’s firmness.
Markets are increasingly pricing in BOJ rate hikes, with consecutive hikes from September onward being assumed. At the same time, the fiscal and balance-sheet implications of consecutive rate hikes are also being watched, given the BOJ’s large-scale asset management and concerns over government finances.
The focus from this week onward will be the Jackson Hole symposium, held from 27 to 29 August, NVIDIA’s earnings and the release of the FOMC minutes. Depending on the direction of US economic indicators, the trading range for USD/JPY and the movements of cross-yen pairs could change again.