Yen Rises Amid BoJ Rate Hike Speculation

(RTTNews) - The Japanese yen strengthened against other major currencies in the Asian session on Wednesday, amid increasing consensus that the Bank of Japan (BoJ) will continue on its policy normalization path and raise interest rates in October.

Growing geopolitical tensions and the U.S. government shutdown, also led to the upturn of safe-haven JPY.

Traders now turn to the US ISM Manufacturing PMI and the US ADP data for a fresh impetus.

Meanwhile, Asian stocks traded higher as traders react to a slew of economic data released in the region, despite the US government nearing a shutdown after a short-term spending bill failed to be passed. Traders remain optimistic about further interest rate cuts after a bigger than expected decrease in U.S. consumer confidence in September.

To prevent the U.S. government from running out of federal funds, a short-term spending bill needed to be approved by the Congress. Shutdowns in the past have been avoided through a last-minute deal.

In economic news, large manufacturing in Japan accelerated slightly in the third quarter of 2025, the Bank of Japan's quarterly Tankan Survey of business sentiment showed on Wednesday with a diffusion index score of +14. That was in line with forecasts for +10 and was up from +13 in the previous three months. The outlook came in at +12, missing forecasts for +13 and unchanged from the previous quarter.

The large non-manufacturers index came in at +34, beating forecasts for +33 and unchanged from Q2. The outlook rose to +28 from +27 in the three months prior. The small manufacturing index was steady at +1 with an outlook of -1, while the small non-manufacturing index slipped to +14 from +15.

Meanwhile, the manufacturing sector in Japan continued to contract in September, and at a faster pace, the latest survey from Jibun revealed on Wednesday with a manufacturing PMI score of 48.5. That's down from 49.7 in August and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.

In the Asian trading today, the yen rose to a 2-week high of 173.20 against the euro, a 1-month high of 198.32 against the pound and nearly a 2-week low of 147.33 against the U.S. dollar, from yesterday's closing quotes of 173.70, 198.98 and 148.03, respectively. If the yen extends its uptrend, it is likely to find resistance around 171.00 against the euro, 195.00 against the pound and 145.00 against the greenback.

Against the Swiss franc, the yen edged up to 185.39 from Tuesday's closing value of 185.86. The greenback may test resistance near the 183.00 region.

Against Australia, the New Zealand and the Canadian dollars, the yen advanced to a 1-week high of 97.35, a 4-month high of 85.49 and nearly a 3-month high of 105.87 from yesterday's closing quotes of 97.86, 85.79 and 106.31, respectively. The yen is likely to find resistance around 95.00 against the aussie, 83.00 against the kiwi and 104.00 against the loonie.

Looking ahead, Eurozone CPI data for September is due to be released at 5:00 am ET in the European session.

In the New York session, U.S. MBA mortgage approvals data, U.S. ADP employment data, construction spending for August, U.S. EIA crude oil data, U.S. and Canada manufacturing PMI data for September and Switzerland National Bank's quarterly bulletin are slated for release.