The Bank of Japan kept its policy rate at 1% on Friday, its highest level in 31 years. Confirmed currency intervention pushed the yen from above 163 to below 158 per dollar before the effect faded, bringing USD/JPY back to around 160.175. The US Federal Reserve also held rates for the fifth straight time, weakening the dollar and narrowing the spread with Japan’s 1% benchmark, which threatens yen carry trade strategies. Analysts expect another rate hike to 1.25% by year-end, and traders will closely watch Governor Kazuo Ueda’s tone for hawkish signals. A stronger yen or a too-narrow rate gap could rapidly unwind carry trade positions.
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