The yen weakened against the dollar after a summary of opinions from the Bank of Japan's September meeting disappointed investors looking for signs of another rate hike this month. Japan's currency dropped as much as 0.5% to 158.21 against the dollar and was the worst performer among its Group-of-10 peers. "While there were many hawkish opinions, they were not hawkish enough to strengthen expectations for a consecutive rate hike," said Takuya Kanda, senior FX analyst at Gaitame.com Research Institute. The BOJ affirmed that its policy focus has shifted to preventing inflation from overshooting its target, in the summary from its last meeting when authorities raised the policy rate to the highest since 1995.
Swaps market pricing for a rate hike by Oct. 30 slipped to just under 20% this morning from more than 30% at one point yesterday. A move is fully priced in by the December gathering. Meanwhile, yields on Japanese government bonds rose, notably on longer tenors, suggesting market concern that the central bank may not be moving fast enough to contain inflation.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing