FX.co ★ Japanese Yen Firms Up Amid Strong Data

On Wednesday, the yen remained stable around 148 per dollar after experiencing gains for three consecutive sessions. This steadiness was attributed to data indicating that sentiment among major manufacturers improved in the third quarter to its highest level since the fourth quarter of 2024, despite ongoing US tariff pressures. The Bank of Japan had previously identified this survey as a crucial indicator for determining the timing of interest rate hikes. Currently, market expectations reflect a 39% probability of a quarter-point increase during this month’s policy meeting. The September Summary of Opinions disclosed a division among policymakers: some advocated for additional rate hikes if growth and inflation forecasts remain robust, while others preferred maintaining low rates to protect the economy from tariff-related threats. Externally, the yen gained further support from a weakening dollar, influenced by the potential threat of a US government shutdown.