Analyst: If Japan's inflation data boosts rate hike bets, the yen may appreciate further

ChainCatcher news, the yen has reached a 10-week high against the dollar. Chris Turner, an analyst at ING, stated in a report that if the upcoming inflation data supports the market's expectations for further interest rate hikes by the Bank of Japan, the yen may strengthen further.

Data shows that the market expects a high probability of a rate hike by the Bank of Japan in July, but the full incorporation of a 25 basis point rate hike is not expected until September.

Turner noted that it is surprising how strongly the yen has reacted to these "relatively mild interest rate changes." However, although Japanese inflation data may further push the USD/JPY lower in the short term, the USD/JPY exchange rate is not expected to decline significantly.