JPY: BoJ hikes, Yen shrugs – Commerzbank

FXStreet Insights Team FXStreet

The Bank of Japan (BoJ) raised rates to a 30-year high and signaled further hikes, but the yen weakened as markets judged the tightening path too slow to drive a near-term Japanese Yen (JPY) rebound, Commerzbank's FX analyst Volkmar Baur notes.

USD/JPY jumps above 156

"This morning, the BoJ raised its key interest rate to 0.75%, the highest level in 30 years. In addition, its statement makes it clear that the central bank intends to raise interest rates further if the economy develops as expected. However, this is not apparent when looking at the yen."

"USD/JPY actually rose above 156 following the interest rate decision, and market expectations for further interest rate hikes in the coming year have hardly changed. One cannot entirely blame the market. The announcement that interest rates would be raised further has been in the press release for a long time, and for 2025 this meant just two interest rate hikes, and these were 11 months apart."

"Therefore, it will take more for the JPY to regain some ground against the US dollar and it will take a combination of several factors to strengthen the JPY next year. Better economic momentum, together with a sustained normalization of inflation, as well as a central bank that is nevertheless willing to continue raising interest rates towards neutral. We expect all of this to happen in the coming year, accompanied by a stronger yen."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD remains weaker as UK-US yields narrow

GBP/USD extends its losses for the second consecutive day, trading around 1.3450 during the Asian hours. The pair depreciates as the British Pound softens even as United Kingdom political risk fades.

EUR/USD weakens amid Middle East tensions

EUR/USD extends its losses for the second consecutive day, trading around 1.1520 during the Asian hours. The currency pair faces downward pressure as the US Dollar gains strength, propelled by renewed safe-haven demand among global investors.

How Wall Street rigs the game [Video]

In this week’s Live from the Vault, Andrew Maguire is joined by Peter Antico and Sean Stone to discuss the Paradigm of Money - an in-depth expose of financial market corruption, from naked shorting to the two-tier system that protects Wall Street.

Bitcoin under pressure, Ethereum trades sideways, Ripple gravitates toward $1

Bitcoin and Ethereum remain under pressure after mild gains, while Ripple slides over 5% so far this week. BTC faces rejection near a key resistance barrier, and ETH has been trading sideways for the last 22 days. At the same time, XRP is gravitating its correction toward the key $1 support zone.

Markets question Fed's inflation resolve after July FOMC meeting

Federal Reserve Chairman Kevin Warsh continues to project a tough stance on inflation, repeatedly promising to restore price stability and keep inflation anchored at the central bank's longstanding 2% target. But according to Mike Maharrey in this week's Money Metals Midweek Memo, markets are beginning to judge the Fed by its actions rather than its rhetoric—and so far, they aren't convinced.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.