Yen Soars as BOJ Hints at December Rate Hike, Dollar Struggles

The yen rose as Bank of Japan Governor Kazuo Ueda hinted at a possible interest rate hike in December. The dollar experienced a downturn amid expectations of a U.S. rate cut. Traders are closely watching the BOJ's upcoming policy meeting for clearer guidance on their interest rate strategy.

The yen strengthened on Monday, driven by remarks from Bank of Japan Governor Kazuo Ueda, who hinted at a potential rate hike in December. This development comes as the dollar weakened with investors anticipating a U.S. rate cut soon.

Ueda indicated that the central bank is considering the "pros and cons" of an interest rate increase at its next policy meeting, marking the most explicit signal yet of a potential raise. A stronger yen rally ensued, and the dollar dropped 0.4% against the yen, reaching 155.51.

Market experts, including OCBC and MUFG currency strategists, suggest a December hike is likely, although the yen's full recovery hinges on the BOJ's ongoing strategy. As traders price in a December rate change, financial markets are poised for a pivotal month of monetary policy adjustments.

(With inputs from agencies.)