The Bank of Japan's governor hinted at interest rate hikes, but the market still bets on a weaker yen

Market speculation suggests that the Bank of Japan is likely to raise interest rates this month, but participants are still betting that the yen will continue to weaken.

Traders from Bank of America, Nomura Holdings, and Royal Bank of Canada indicate that investor positions reflect this bet. Citigroup's "pain index" for the yen remains deeply in negative territory, showing that negative sentiment towards the yen persists in the market.

Even as Bank of Japan Governor Kazuo Ueda hinted that rates may be raised soon, and the Bank of Japan is reportedly preparing to raise rates in December if the economy or financial markets are not significantly impacted, investors still maintain a bearish outlook on the yen. The reason is that even if the Bank of Japan takes action, Japan's yields are still expected to be significantly lower than those in the U.S., which favors the dollar.

Ivan Stamenkovic, head of G-10 currency trading for Bank of America in the Asia-Pacific region, stated, "Positions still lean towards betting that the dollar-yen will continue to rise before the end of the year, unless the Bank of Japan delivers a real surprise, this trend will not change." He added that Ueda's hawkish comments sparked discussions about this currency pair, but market sentiment did not undergo a substantial shift. (Jin Shi)