USD/JPY neared 158 even after the Bank of Japan raised its policy rate by 25 basis points. The Federal Reserve's own rate hikes kept the US-Japan rate gap from narrowing, so the yen carry trade stayed intact instead of unwinding.
USD/JPY climbed to nearly 158 even after the Bank of Japan raised its policy rate by 25 basis points and signaled further increases ahead. Normally, a BOJ rate hike strengthens the yen — this time, it didn't.
The Federal Reserve is behind the disconnect. It also raised rates, with another increase expected this month, keeping the US-Japan rate gap from narrowing. That gap leaves yen borrowing still profitable, and it puts the Bank of Japan in a difficult spot.
If rate hikes alone cannot strengthen the yen, intervention becomes the remaining option, likely through selling US Treasuries.
Source: Coinpedia Fintech News (snippet-based)
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