Investors brace for a 1.25% BOJ rate hike as Japanese bond yields climb and the Nikkei 225 faces continued pressure from a strengthening yen.
Japanese yen strengthened 6% from July low with carry trade unwind, and BOJ hike expected to further support yen.
The Nikkei 225 lost 8.4% in a month and faces further downside from Japan rate hike and yen carry unwinding.
Bitcoin remained stable near $77,721 and absorbed a similar yen shock last week, but a hawkish BOJ signal could test the divergence.
The Bank of Japan is expected to lift interest rates to 1.25% this week, marking the highest level since 1995. As the yen carry trade unwinds and bond yields surge, the Nikkei 225 has dropped 8.4% over the past month. While Bitcoin has shown resilience near $77,721, analysts warn that a hawkish signal from the central bank could test this divergence.
The rate hikes are driven primarily by supply-side pressures and record government spending requests, rather than inflation, forcing investors to demand higher yields on Japanese government debt.