Shafaqna English– Tuesday saw the Japanese yen rally to its highest point in almost seven months, as heightened expectations for a Bank of Japan rate hike next week prompted bearish traders to unwind their short positions in a rush to limit losses.
The resulting buying frenzy lifted the currency significantly, while simultaneously adding to the greenback’s woes ahead of crucial U.S. inflation figures due out this week. The market’s shifting sentiment reflects growing confidence that the BOJ is preparing to normalize policy further, a move that has caught many leveraged funds off guard.
During the trading session, the yen appreciated to an intraday peak of 152.89 against the dollar, breaching the levels that had prompted Japan’s currency intervention in July and marking its strongest valuation since February of this year.
However, the currency failed to sustain these gains and retreated modestly, settling around 154 per dollar during morning trading hours in London. This pullback suggests that traders are taking profits off the table while awaiting further clarity on both the BOJ’s policy trajectory and the upcoming U.S. economic data.
Source: Reuters
Dollar in wait-and-see mode