- The Japanese yen strengthened as South Korea’s martial law declaration spurred a flight to safety, while the won hit its lowest level since October 2022.
- Market sentiment shifted with a 60% probability of a BOJ rate hike this month after Governor Ueda signaled alignment with economic data.
Asia is where the drama in currency currently resides.
The Japanese yen found support today following South Korea’s decision to declare martial law, prompting a flight to safety across markets. The South Korean won tumbled to ₩1,444 at one point, its lowest since October 2022 (now trades at ₩1,416).
Over the weekend, Bank of Japan Governor Kazuo Ueda signaled that additional rate hikes are approaching, as economic data aligns with expectations. Market sentiment has now shifted, with the probability of a 25-basis-point rate hike in Japan this month rising to approximately 60%, up from 50%.
Technically, a deeper decline in the USD/JPY could target the 61.8% retracement level from the July high to the September low. Daily Awesome Oscillators remain in bearish territory, signaling caution for significant moves, as short-term momentum continues to weaken.
