Japanese Yen outperforms this week as market bets on BoJ's extended tightening cycle
The Japanese Yen (JPY) bounces back against the US Dollar (USD) on Friday after a sharp corrective move the previous day. In the European trade, the USD/JPY is down 0.3% to near 154.00 at the time of writing.
The Japanese Yen gained strength against the US Dollar throughout the week, as market participants anticipated the Bank of Japan (BoJ) would continue its monetary tightening cycle. On Friday, the USD/JPY exchange rate dropped by 0.3% to around 154.00. The Yen experienced a 1.26% increase against the US Dollar, as investors bet on higher interest rates from the BoJ next week, potentially by 25 basis points to 1.25%.
This move would mark the highest level in 31 years. The Yen also outperformed against the New Zealand Dollar during the week, displaying the strongest performance among major currencies. Analysts attributed the Yen's strength to positioning adjustments ahead of upcoming events, coupled with pricing that reflects the Bank of Japan's intention to tighten monetary policy faster.
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