Yen Rises Amid BoJ Rate Hike Speculation

(RTTNews) - The Japanese yen strengthened against other major currencies in the Asian session on Tuesday, as the Bank of Japan's (BoJ) meeting minutes suggest the possibility of interest rate increases, contingent upon the anticipated performance of the economy and price.

Minutes from the central bank's June 16-17 monetary policy meeting showed that members of the Bank of Japan's Monetary Policy Board felt that the country's economic recovery is continuing at an acceptable pace, although it is starting to show signs of slowing.

At the meeting, the Bank of Japan decided to maintain its benchmark interest rate at 0.5 percent and to reduce the pace of the amount of bond purchases from April next year amid rising uncertainties in financial markets and global trade policies.

The amount will be cut by around JPY 400 billion each calendar year until January-March 2026, and by about JPY 200 billion each calendar quarter from April-June 2026.

On Tuesday, Ryosei Akazawa, the Japanese Economy Minister and chief trade negotiator, stated that he will urge the United States (US) to expedite the implementation of the auto tariff. Akazawa further remarked, "One of the objectives of the US visit is to verify the specifics of the most recent tariff agreement."

Traders remain cautious as the reciprocal tariffs are set to take effect only from August 7, the global economy is yet to feel the heat of its impact but have re-ignited global trade war tensions and concerns of an economic slowdown in the near term.

Meanwhile, traders remain optimistic about the weak monthly U.S. jobs data will lead the U.S. Fed to lower interest rates next month. Traders also picked up stocks at a bargain following the recent downturn in the markets.

According to CME Group's FedWatch Tool, the chances of a quarter point interest rate cut in September have jumped to 91.9 percent from 63.1 percent a week ago.

In economic news, data from Jibun Bank showed that the services sector in Japan continued to expand in July, and at a faster pace, with a services PMI score of 53.6. That's up from 51.7 in June.

In the Asian trading today, the yen rose to a 5-day high of 169.82 against the euro, nearly a 2-week high of 146.62 against the U.S. dollar and more than a 1-month high of 181.60 against the Swiss franc, from yesterday's closing quotes of 170.05, 146.80 and 181.87, respectively. If the yen extends its uptrend, it is likely to find resistance around 168.00 against the euro, 145.00 against the greenback and 179.00 against the franc.

Against the pound, the yen edged up to 195.04 from Monday's closing value of 195.21. On the upside, 193.00 is seen as the next resistance level for the yen.

Against the Australia and the New Zealand dollars, the yen edged up to 94.98 and 86.87 from yesterday's closing quotes of 95.04 and 86.85, respectively. The yen may test resistance near 93.00 against the aussie and 85.00 against the kiwi.

The yen climbed to nearly a 1-month high of 106.53 against the Canadian dollar, from Monday's closing value of 106.61. The next possible upside target for the yen is seen around the 105.00 region.

Looking ahead, Canada and U.S. trade data for June, U.S. S&P Global and ISM PMI reports for July and U.S. RCM/TIPP economic optimism index for August are slated for release in the New York session.