The Bank of Japan governor hinted at an interest rate hike, but the market still bets on a weaker yen.

According to Odaily Planet Daily, the market speculates that the Bank of Japan may raise interest rates this month, but participants are still betting that the yen will continue to weaken.

Traders at Bank of America, Nomura Holdings, and RBC Capital Markets said investor positioning reflects this bet. Citigroup's "misery index" for the yen remains deep in negative territory, indicating persistent negative sentiment towards the yen. Even with Bank of Japan Governor Kazuo Ueda hinting at a possible imminent rate hike, and the BOJ reportedly preparing to raise rates in December unless there is a major shock to the economy or financial markets, investors remain bearish on the yen. This is because even if the BOJ takes action, Japanese yields are still expected to be significantly lower than those in the US, which is more favorable for the dollar.

Ivan Stamenovich, head of G-10 currency trading for Asia Pacific at Bank of America, said: “Positioning remains biased towards a continued rise in USD/JPY until the end of the year, and this trend is unlikely to change unless the Bank of Japan delivers a real surprise.” He added that Ueda’s hawkish comments sparked discussion about the currency pair, but market sentiment has not fundamentally changed. (Jinshi)