Yen rebounds amidst BoJ’s hawkish stance – London Business News | Londonlovesbusiness.com

The Japanese Yen has experienced a strong rebound in the Asian session, notably against the US dollar.

The dollar-yen pair pulled back from above the 157 level to now attempt to retest earlier levels from this week.

This comes as remarks by Bank of Japan (BoJ) board member Seiji Adachi injected fresh momentum into the market, hinting at the possibility of interest rate hikes if the yen’s depreciation drives inflation higher.

This commentary has changed perceptions of the BoJ’s future actions, leaving investors eager for the release of Tokyo’s inflation data on Friday to gauge economic conditions and anticipate potential policy adjustments.

Projections suggest that Tokyo’s core CPI for May could rise to 1.9% year-on-year, up from the previous 1.6%. The yen might see further strengthening for a potential rebound if the inflation data indicates a worsening trend surpassing market expectations. A more hawkish stance could also support Japanese treasury yields despite a decline today.

Traders’ focus now shifts to the US, with the release of the US GDP data due later today. The US economy is expected to expand at a slower annualized rate of 1.3%, compared to the previous reading of 3.4%. A deceleration of the American economy could further support the yen’s potential rebound and could put some pressure on US treasury yields.