A yen carry-trade unwind pushes the currency to a one-month high into the BOJ's September decision

What happened

The yen strengthened into the 155-per-dollar range on 09-04, from around 157 the day before and a low near 158 earlier in the week, on speculation that the Bank of Japan will hike faster than expected at its 09-17/18 meeting and that yen-funded carry trades are being unwound. Bloomberg led with "Carry Trade Exodus Fuels Yen Surge Ahead of BOJ Rate Decision," reporting traders rapidly closing yen-funded positions after Governor Ueda said hikes are on the table at every meeting and board member Takata's hawkish remarks, with Nomura sketching an "extreme scenario" of three consecutive hikes through December; Nikkei Asia reported the market reading a rare August meeting of Japan's public pension fund as a signal of more yen-asset buying. The 10-year JGB yield sat above 3%, the level it first crossed on 09-01. The move is the FX channel through which a Tokyo decision reaches US risk assets: the last comparable unwind, in August 2024, took the Nikkei down 12% in a day and the S&P 500 3% before the BOJ walked back its guidance. (Nikkei Asia, Bloomberg)

Sources 2

Nikkei Asia asia.nikkei.com unrated
Bloomberg bloomberg.com high 0.84 disputed / split

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The wider story

This event sits inside The Cross-Border Rate Leg, which carries how it developed before and since.

Adjacent threads (shared entities):

· Treasury's Long-End Defense