BoJ Interest Rate Hike Speculation Leads Yen to Strengthen
The Japanese yen strengthened and remained near its highest level since November 14th against the US dollar earlier this week. This JPY strengthening was triggered by Japanese wage growth data, which revived speculation that the Bank of Japan (BoJ) could soon raise interest rates, potentially even at its December meeting. This signal was strong enough to offset the negative impact of Japan's sluggish third-quarter GDP data. At the same time, cautious global market sentiment has led to the yen's renewed interest as a safe haven asset.
Increasingly hawkish expectations for the BoJ have pushed Japanese government bond (JGB) yields closer to multi-year highs. The narrowing interest rate differential between Japan and other major economies has made the typically low-yielding yen more attractive. Meanwhile, the US dollar weakened to its lowest level since late October as markets increasingly believe the Fed will cut interest rates again this week. This combination of expectations for a Japanese interest rate hike and the potential for a US interest rate cut put pressure on the USD/JPY pair throughout the Asian session. (az)
Source: Newsmaker.id
