USD/JPY: Dollar Regains Key ¥157.00 Level as Gloomy Mood Sweeps Forex Markets

Japan’s 10-year government bond yield soared above 1% for the first time since 2013 as traders anticipate higher interest rates.

• The USDJPY pair was gaining traction early Friday, on pace to wrap up a three-day winning streak. Broad dollar bullishness and increased safe haven demand reshuffled the dealmaking scene across forex corners after the latest Federal Reserve minutes. In the summary, Fed officials sound the alarm over stubborn inflation and push back on expectations for interest rate cuts in the coming months.
• The looming uncertainty sent currency speculators to the perceived safety of the US dollar, buoying it higher across the board. The dollar-yen pair touched an intraday high of ¥157.15, marking a new monthly peak. The exchange rate has managed to erase nearly all losses from early May when Japan stepped in to save the battered yen and plowed $60 billion in long yen positions.
• In Japan, the 10-year government bond yield touched the 1% mark for the first time in 11 years. The move was prompted by traders increasing their bets that the Bank of Japan will start lifting interest rates in continuation of a monetary policy pivot that seeks to get the Japanese economy back on track while keeping inflation at a moderate pace of growth.