Yen hangs near 160 amid BOJ rate-hike bets, dollar wobbles

The Japanese yen steadied near the 160-per-dollar level on Tuesday, following US Treasury Secretary Scott Bessent's warning to the Bank of Japan to hike rates later this month, according to wire reports. US President Donald Trump threatened further strikes against Iran amid ongoing Middle East tensions, causing Brent crude futures to surpass $91 a barrel and Treasury yields to rise.

The yen had weakened past the 160 level in the preceding sessions. Bessent expressed confidence in the Japanese government and the BOJ taking actions that would strengthen the yen. The yen has since recovered most of the gains from a rare joint intervention by the US and Japan in July. Market expectations are that the BOJ will raise rates in September, but analysts argue that a more robust response is needed to move the yen away from the 160 mark.

The US dollar was weakened compared to Friday's gains, with the dollar index easing to 99.37. Fed Chair Kevin Warsh hinted at potential rate hikes in September if inflation does not cool, increasing the chances of a Fed hike to 65% from 41% a week earlier. Rising oil prices and Treasury yields have not bolstered the USD, possibly due to doubts about Warsh's hawkish stance.

Economic data releases later in the week will provide further insight into whether the Fed will deliver a rate hike.