The yen held largely steady against the dollar on Thursday after Bank of Japan Deputy Governor Ryozo Himino warned of upside inflation risks but stopped short of explicitly signaling a September rate hike. A money market broker still prices an 86% chance of a BOJ move next month, while fresh US inflation data kept Federal Reserve rate-hike bets alive ahead of the Jackson Hole symposium.
Yen little moved after Himino's remarks
The yen traded at 159.30 per dollar, barely changed after Himino said timely rate hikes would help Japan avoid an inflation spike that could force abrupt tightening later. However, he stopped short of the kind of language the BOJ used ahead of its January 2025 meeting, when it flagged a hike more explicitly in a speech and press conference.
Traders still lean toward a September move
Market participants had been watching for clues on the likelihood of a September rate hike and the pace of further tightening, with money market broker Totan Tanshi pricing an 86% chance of a BOJ hike next month. Sho Suzuki, a market analyst at Matsui Securities, said the absence of a clear signal still leaves room for weakness, noting: "there is some chance the yen could come under renewed downward pressure."
Suzuki added that the lack of an explicit signal does not necessarily mean expectations for a September hike will fade, pointing to board member appearances scheduled before the BOJ's September 17 and 18 meeting.
Dollar index steady as inflation data supports Fed bets
The dollar index was steady at 99.13 after paring gains from an eight-day high. The move came after the US Commerce Department reported the Personal Consumption Expenditures Price Index rose 3.7% in the 12 months through July, unchanged from June and slightly above the 3.6% estimate from economists polled by Reuters. On a month-on-month basis, the index rose 0.2%, against an estimate for a 0.1% increase, after falling 0.1% in June.
The reading kept the market's expectation for a Fed rate hike by year-end alive. Westpac economist Ryan Wells said Federal Reserve Chairman Kevin Warsh's Jackson Hole speech, due later Thursday, will be the ultimate test for that expectation.
Source: Investing.com (Reuters)
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