The Japanese yen strengthened against the US dollar on Thursday, with USD/JPY falling about 0.65 percent to trade around 157, its lowest level since September 30. The move put the pair on track for its biggest daily decline in a month.
Concerns over investments tied to artificial intelligence weighed on global equities, pushing investors toward the yen as a haven. Falling Japanese government bond yields and a narrowing gap between US and Japanese yields also supported the currency.
Rate outlook narrows the gap
The US Dollar Index traded near 101.75, close to a three-week low of 101.45. Gains for the yen were limited by the wide yield gap, with the US 10-year Treasury yield near 5.04 percent against about 2.86 percent for Japan’s 10-year bond.
Standard Chartered analysts expect the Bank of Japan to keep its policy rate unchanged at 1.25 percent at its 29-30 October meeting, following a 25 basis point hike in September. They said the debate is shifting from whether the BoJ will hike again to when.
Traders look to next week
The Federal Reserve is expected to hold rates after its own 25 basis point increase in September. CME FedWatch Tool odds of another Fed hike in December stood at 89 percent.
Standard Chartered sees December as a live meeting for a BoJ move, with January 2027 as its base case. Energy-driven inflation linked to the Middle East conflict is keeping central banks cautious.
By our market data, USD/JPY stood at 156.942 yen as of 18:02 GMT on 22 October, its lowest in 31 days.
Data: Swissquote
