The yen advanced further on Tuesday, pushing USD/JPY to its lowest level since mid-February as traders increasingly priced in a Bank of Japan rate hike at the central bank's Sept. 17-18 policy meeting.
The dollar-yen pair fell 0.8% to 153.18 yen by 02:50 GMT, after touching 152.87 earlier in the session. The pair shed 1.2% in the previous trading session and has declined nearly 4% from around 160 yen at the start of last week.
Markets are now pricing in a near-full expectation of a 25-basis-point increase, which would lift the policy rate to 1.25%. The momentum comes after a series of reinforcing data points: real wages in July rose 2.4% year over year, providing fresh ammunition for policymakers arguing that the economy can sustain further tightening. In addition, Japan's GDP grew at an annualized 1.4% in the April-June quarter, above the initial estimate of 1.1%.
Takuji Aida, economic adviser to Prime Minister Sanae Takaichi, forecast a September rate hike and indicated that further increases would follow.
On the policy-coordination front, Japanese Finance Minister Satsuki Katayama said on Tuesday that Tokyo would seek to maintain orderly foreign exchange markets. She noted that Japan and the United States remained aligned on currency policy, with the stance unchanged following the two countries' coordinated intervention in July and recent discussions with U.S. Treasury Secretary Scott Bessent.
Meanwhile, Brent crude held above $97 a barrel on Tuesday, underpinned by threats of Iranian retaliation against U.S. energy interests in the Gulf.
