Yen Rises Amid BoJ Rate Hike Speculation

The Japanese yen strengthened against other major currencies in the Asian session on Monday, as traders speculate the Bank of Japan is likely to implement another interest rate hike in the near term. Also, escalating geopolitical tensions also supported the safe-haven yen.

Investors bet on a dovish tone emerging in the U.S. Federal Reserve's July policy meeting minutes and Chair Jerome Powell's upcoming speech at Jackson Hole.

Growing optimism that the U.S. economy is headed for a soft landing after upbeat U.S. retail sales data and improving U.S. consumer sentiment, which also increased confidence the U.S. Fed will start cutting interest rates next month, but less aggressively.

Comments from Atlanta Fed President Raphael Bostic and Chicago Fed President Goolsbee have also bolstered market expectations that the central bank will begin cutting rates in September.

In economic news, data from the Cabinet Office showed that Japan's core machinery orders rebounded more than expected in June. Core machinery orders that exclude volatile orders for ships and electric utilities, expanded 2.1 percent from the prior month, faster than the expected 0.9 percent increase and reversed May's 3.2 percent decline.

Meanwhile, core machinery orders posted an annual decline of 1.7 percent, in contrast to the 10.8 percent increase in May.

In the Asian trading today, the yen rose to a 1-week high of 160.42 against the euro, a 2-week high of 168.37 against the Swiss franc and a 5-day high of 188.24 against the pound, from Friday's closing quotes of 162.75, 170.30 and 191.03, respectively. If the yen extends its uptrend, it is likely to find resistance around 153.00 against the euro, 167.00 against the franc and 182.00 against the pound.

Against the U.S. dollar and the Canadian dollar, yen advanced to near 2-week highs of 145.19 and 106.22 from last week's closing quotes of 147.58 and 107.86, respectively. The yen is likely to find resistance around 141.00 against the greenback and 101.00 against the loonie.

Against the Australia and the New Zealand dollars, the yen climbed to 4-day highs of 97.00 and 88.24 from Friday's closing quotes of 98.38 and 89.32, respectively. On the upside, 90.00 against the aussie and 82.00 against the kiwi are seen as the next resistance levels for the yen.

Looking ahead, U.S. Consumer Boards leading index for July is due to be released in the New York session.