Yen Rebounds as BOJ's Koeda Backs Rate Hikes and Intervention Warnings Mount

The Japanese yen attempted a recovery against the US dollar following hawkish Bank of Japan commentary and currency intervention warnings from Japanese Finance Minister Satsuki Katayama. BOJ board member Junko Koeda stated the central bank should not be overly cautious regarding further interest rate hikes, highlighting that Japan's neutral rate could exceed 2% compared to the current 1.25% policy rate. While more than 70% of CPI items are rising year-on-year, analysts noted wide US-Japan bond yield spreads maintain the broader USD/JPY bull trend despite US inflation hitting 3.7% in September.