JPY: Neutral rate debate supports gradual gains – Commerzbank

FXStreet Insights Team FXStreet

Commerzbank’s Volkmar Baur expects the Bank of Japan (BoJ) to deliver two further rate hikes in 2026, taking policy closer to a rising neutral rate and supporting a modest Japanese Yen appreciation versus Dollar (USD) and Euro (EUR) in the second half of the year. He also projects USD/JPY and EUR/JPY to edge lower from current levels into late 2026 and 2027.

BoJ tightening seen lifting Japanese Yen

"The current policy rate of 0.75% is therefore still below even the lowest estimate of the neutral interest rate."

"All in all, one can therefore say that financial conditions remain stimulative, which would support the assessment that the key interest rate has not yet reached a neutral level."

"This supports our view that the Bank of Japan will raise interest rates two more times this year."

"The pricing out of these expectations in the US and Europe should therefore cause the Japanese yen to appreciate against the USD and the euro in the second half of the year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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.

AUD/USD meets support near 0.7150

AUD/USD comes under renewed and quite strong selling pressure ahead of the Asia opening bell on Friday, drifting back toward multi-day troughs near 0.7150, where it seems to have met some decent contention for now. The Aussie’s decline follows the inflation-reignited uptick in the Greenback in response to robust US factory-gate prices in August.

USD/JPY consolidates around 153.50 as bears turn cautious ahead of US inflation

USD/JPY stabilizes above 153.50 during the Asian session on Thursday, but remains near a seven-month low set earlier this week as hawkish BoJ repricing continues to underpin the Japanese Yen. Meanwhile, rising September Fed rate-hike bets and escalating US-Iran tensions help ease US Dollar selling pressure, offering some support to the currency pair ahead of US inflation figures.

Gold remains weak, retargets $4,350

Gold keeps the choppy price action on Thursday, now slipping back toward the $4,350 region per troy ounce amid the robust bounce in the US Dollar as well as rising US Treasury yields across the curve, particularly following US Producer Prices and ahead of Friday’s more relevant US CPI data.

Bitcoin and Gold Outlook: BTC and XAU drop as US PPI broadens rate-hike bets

Cryptocurrency prices are broadly correcting, led by Bitcoin (BTC), which is trading around $77,000 on Thursday, marking four consecutive days of declines. Meanwhile, Gold (XAU) remains sideways, hovering around $4,365, with upside capped below $4,400.

ECB recap: A hawkish hike despite downside growth risks

The European Central Bank (ECB) increased the Deposit Facility Rate to 2.50%, the Refinancing Rate to 2.65% and the Marginal Lending Facility to 2.90%, effective from September 16. The decision was accompanied by a clear warning that the outlook remains highly uncertain, with risks tilted to the upside for inflation and to the downside for growth.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.