FX.co ★ Japanese Yen Stays Range-Bound

The Japanese yen hovered around 159.5 per dollar on Wednesday, trading in a narrow range for more than a week after surrendering roughly half of the gains notched in the wake of the late-July joint intervention by Tokyo and Washington. The currency remains under sustained pressure from wide interest rate differentials, rising fiscal concerns, and persistently high energy and import costs.

On the monetary policy front, markets are increasingly pricing in a possible Bank of Japan interest rate hike in September aimed at bolstering the yen and restraining inflation. Japan’s 10-year government bond yield climbed to its highest level in three decades this week, underscoring expectations of an imminent BOJ move and intensifying worries over the country’s fiscal trajectory.

Meanwhile, the latest data showed that Japan’s core machinery orders surged 9.7% in June, beating market forecasts and signaling stronger capital expenditure by businesses.