Japanese Yen: USD/JPY rises as October BoJ hike bets fade – MUFG

The Japanese Yen has weakened by approximately 0.5% against the US Dollar, pushing the USD/JPY rate to 158.44, following the Bank of Japan's (BoJ) Summary of Opinions. This report, released after the 17th-18th September policy meeting, failed to satisfy expectations for an October rate hike. Consequently, Japanese rate markets have lowered their anticipated BoJ tightening rates, while MUFG still anticipates a hike in December.

The weakening Yen is primarily attributed to the disappointing Summary of Opinions, which disappointed market participants expecting a stronger signal of the BoJ's openness to another hike by the following month. This has caused the Japanese rate market to revise down their BoJ hike expectations. The report aligns with the belief that another hike as soon as next month remains improbable, considering that the BoJ has recently accelerated the pace of hikes and signaled a continued hike every three months.

The Summary of Opinions emphasized that underlying inflation is approaching the BoJ's 2.0% target, emphasizing the importance of stabilizing it around this level to prevent an adverse impact on the economy. The BoJ deemed a shift in the monetary policy phase as the reason for this consideration. In the FXStreet Insights Team report, AUD/USD consolidates near a two-month low, trading around mid-0.6900s amid a strong US Dollar.

Despite softer-than-expected US PCE data, oil-driven inflation fears continue to support elevated US bond yields. Additionally, the US-Iran standoff further bolsters the safe-haven US Dollar, supporting the USD/JPY pair. The US Dollar's broader strength counters hawkish BoJ expectations and Japanese intervention risks. Although gold managed a modest intraday rise to the $4,200 neighborhood, it remains nearly unchanged for the day during the first half of the European session.

The US Dollar's strength is believed to be a significant factor weakening demand for the non-yielding bullion. Hyperliquid (HYPE) experienced a 2% decline on Thursday, erasing its 5% gains from the previous day, with institutional demand easing and resulting in $5 million in outflows on Wednesday. The technical outlook for HYPE indicates a mixed near-term tone, as the price remains capped below $90.

EUR/USD has fallen to its lowest level since May 2025, but the potential for a fresh inflation shock in the Eurozone might unexpectedly benefit the Euro. The pair opened at 1.1312 on Wednesday and trades below its January peak of 1.2082.