Japan Government Bond 1Y

The yen surged into the 156 range in the foreign exchange market shortly before noon U.S. time on the 18th. The electronic edition of Nikkei reported that the Bank of Japan conducted a "rate check," asking market participants about exchange rate levels. A rate check is seen as a preparatory step toward currency intervention. At its policy meeting on the 18th, the BOJ raised its policy interest rate to 1.25 percent, a level last seen about 31 years ago, but two board members opposed the hike, and the yen had been sold in the market on the view that the pace of rate increases would be slower than expected. Governor Kazuo Ueda said at a press conference that "the policy phase has changed," signaling his intention to move preemptively in conducting policy, but some in the market also took the view that the United States, which raised rates on the 16th, was the more hawkish.

Bank of Japan Governor Kazuo Ueda said at a press conference following the monetary policy meeting on the 18th that the policy "phase has changed" as underlying inflation approaches 2%, and set anchoring inflation at the 2% target as a challenge for policy management. After this rate hike, following the one in June, the BOJ maintained the wording in its statement that financial conditions are "accommodative," and strong caution is emerging over the fact that the assessment of financial conditions has not changed despite repeated rate increases. Even after the policy rate was raised to 1% in June, financial conditions have not changed significantly, and real interest rates adjusted for expected inflation remain in negative territory at the one- and two-year horizons, while rising stock prices and a weak yen are also part of the accommodative financial environment. With this rate hike, the policy rate has exceeded the lower bound of the estimated range of 1.1% to 2.5% for the neutral rate based on the BOJ's estimate of the natural rate of interest, but some believe there is still a distance to the actual neutral rate. Regarding the possibility of a rate hike exceeding 25 basis points, Governor Ueda said "various possibilities exist depending on the inflation situation," and explained that "we cannot decide in advance to rule out a particular approach."

The Nikkei index on the Tokyo stock market closed up 882.70 points, or 1.38%, at 65,018.95 points today, September 18, supported by buying back into large technology shares that had been sluggish earlier, and the index briefly surged more than 2% during afternoon trading after investors took the view that the Bank of Japan, or BOJ, still has a gradual approach to raising interest rates. The BOJ decided to raise its policy rate by 0.25% from 1.0% to 1.25% at today's meeting, in line with market expectations. Shares leading the market higher included the nonferrous metals and electrical appliance sectors, while the electric power and gas sector and the oil and coal products sector declined. Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, said that if the BOJ continues raising interest rates as planned, the direction of prices and interest rates will be stable, and that this factor will encourage businesses to decide to invest in expanding their operations. Meanwhile, Kyodo News reported that the investment mood also received additional support after Jensen Huang, chief executive officer of Nvidia, took a stance opposing the introduction of new stricter measures on the development of artificial intelligence, in contrast to senior executives at several AI companies in the United States who had earlier called for slowing down the development of such technology.

The Bank of Japan raised interest rates to their highest level since 1995, a move that failed to lift the yen as Asian stocks mostly advanced in line with a Wall Street rally. The decision passed by a 7-2 majority, and the yen slipped to more than 157 to the dollar from around 156 earlier, even as Tokyo's Nikkei 225 closed up 1.4 percent at 65,018.95. Seoul, Hong Kong, Shanghai, Taipei, Mumbai and Bangkok all advanced, while Singapore, Wellington, Jakarta and Manila fell and Sydney was barely moved; London, Paris and Frankfurt dipped. Oil's retreat eased inflation concerns, with West Texas Intermediate down 1.7 percent at $100.22 per barrel and Brent down 2.0 percent at $102.70, after Saudi Arabia moved to restore within days about half of crude shipments disrupted by the stoppage of its East-West pipeline to the Red Sea. The 10-year US Treasury yield stayed back below five percent, and attention now turns to Governor Kazuo Ueda's news conference later in the day.

At its monetary policy meeting on the 18th, the Bank of Japan decided by a 7-to-2 majority vote to raise the target for the uncollateralized overnight call rate, its policy rate, from around 1.0% to around 1.25%. Board members Toichiro Asada and Ayano Sato opposed the rate hike. At a press conference after the meeting, BOJ Governor Kazuo Ueda said the financial environment remains accommodative even after this rate increase, and stated that with the underlying rate of inflation approaching 2%, the central bank will continue to raise interest rates in line with economic, price, and financial conditions. On the timing and pace of further hikes, he repeatedly said the bank will consider them while examining the certainty and risks of its central economic and price outlook being realized, including the impact of the situation in the Middle East, expanding demand related to artificial intelligence, and fluctuations in foreign exchange rates. Ueda noted that while the short-term policy aim had been to push the underlying inflation rate up toward 2%, it is now approaching that level, and explained that it is important to ensure upside risks to prices do not materialize and adversely affect the economy, adding that 'the policy phase has changed.' He said that although board members Hajime Takata and Naoki Tamura, who are seen by the market as hawkish, will leave their posts next July, the bank basically does not take that into account when deciding the pace of its decisions.

The Bank of Japan raised its policy interest rate by 25 basis points to 1.25 percent on Friday, the highest level in more than 30 years, and said it would continue raising rates to counter inflation fuelled by surging energy prices and a weak yen. The decision was carried by a 7-2 majority vote, and the two dissents drew attention from traders hoping the bank could move faster. Despite the hike, which had been telegraphed for weeks, the yen weakened to more than 157 per dollar from around 156.30 before the announcement, after touching a 40-year low against the dollar in July that prompted a historic joint US-Japanese intervention in foreign exchange markets. Figures on Friday showed core inflation, which excludes volatile fresh food prices, fell to 1.7 percent in August from 1.8 percent, below forecasts for it to remain unchanged, helped by government support for gasoline and electricity fees. Economists warned the reprieve could be short-lived, with Marcel Thieliant of Capital Economics saying higher energy costs are feeding through and inflation is expected to rise above the BoJ's two percent target before long. Tokyo also decided this week on a two-year reduction in the consumption tax on food products, from eight percent to one percent starting in April 2027.

The GBP/JPY cross attracted fresh buyers during the Asian session on Friday and jumped to a nearly two-week top, beyond 209.50, after the Bank of Japan announced its policy decision. The Bank of Japan raised its policy rate to a 31-year high, a move that weighed on the Japanese yen and lifted the British pound against it. The pound's advance to a nearly two-week top beyond 209.50 came as the yen declined following the BoJ's rate-hike decision. The cross drew fresh buying interest through the Asian session on Friday, extending the move past the 209.50 level.

Retail gold prices in the country opened higher this morning by 400 baht per baht-weight of gold, with the Gold Traders Association announcing its first price of the day at 9:03 a.m. Gold bars are bought at 68,300 baht per baht-weight and sold at 68,500 baht per baht-weight, while gold ornaments are bought at 66,931.40 baht per baht-weight and sold at 69,300 baht per baht-weight. An analysis by YLG Bullion International Co., Ltd. noted that yesterday gold closed up 77.80 dollars, recovering from its lowest level in nearly six weeks, after oil prices fell for a second consecutive day to a one-week low as supply concerns eased, helping to reduce inflationary pressure. Meanwhile, the dollar weakened from its seven-week high after the market absorbed the latest interest rate hike by the US Federal Reserve. Today the market is still watching the Bank of Japan meeting, which is expected to raise interest rates to their highest level in 31 years and may signal further rate hikes ahead, which would affect the direction of the yen, the dollar, and gold.

The Bank of Japan will announce the outcome of its monetary policy meeting today, September 18, and the market consensus is that it will raise its policy rate from 1.00% to 1.25%. In a Reuters survey, 66 of 68 economists expected another hike, and a move just three months after the June increase to 1.00% would be seen as an acceleration in the pace of monetary normalization. At the FOMC meeting on September 16, the Federal Reserve raised its policy rate by 0.25% to a range of 3.75% to 4.00%, a unanimous 12-0 vote marking its first hike since July 2023. If both Japan and the United States raise rates by 0.25%, the interest rate differential would remain roughly unchanged on a simple calculation, so the yen will not necessarily continue to strengthen. What the market is watching is not the rate hike itself, but how far Governor Kazuo Ueda will hint at further increases in October, December, or early 2027, and a rapid yen appreciation could pressure both dollar-denominated and yen-denominated bitcoin through an unwind of yen carry trades.

The Bank of England's Monetary Policy Committee voted 6-3 to keep its policy rate at 3.75% at today's meeting, in line with analyst expectations. Six members voted to hold rates, while three voted for a 0.25% increase. This hold is the sixth of the year, even as inflation remains above the BoE's 2% target, and the BoE has kept rates at 3.75% since December 2025, after cutting rates four times last year. Analysts expect the BoE to raise rates by 0.25% at its next meeting on November 5. The decision puts the BoE's monetary policy at odds with other major central banks: the US Federal Reserve announced a 0.25% rate hike yesterday, its first increase since 2023, while the European Central Bank announced its second rate hike of the year last week, following its first increase in June, which was its first hike in three years. Meanwhile, the Bank of Japan is expected to raise rates by 0.25% to 1.25%, the highest level in 31 years, at its monetary policy meeting tomorrow.

Katsuhiko Kato, chairman of the Japanese Bankers Association, said at a regular press conference on the 17th that the recent rise in interest rates, which has at times pushed the yield on newly issued 10-year government bonds above 3%, reflects economic growth accompanied by an exit from deflation and a virtuous cycle of wage increases, and that with corporate profits expanding, the increase in interest payment costs can be sufficiently absorbed. Regarding the relationship with the rising trend in corporate bankruptcies, he expressed the view that the impact of higher prices, labor shortages, and difficulties in finding successors is in fact greater. On the other hand, he pointed out that if interest rates continue to rise further, companies with high borrowing ratios will see their business performance affected, and said it is important to closely monitor corporate management conditions and respond quickly. On that basis, he said he wants to strengthen support for small and medium-sized enterprises and business restructuring support, not just the mere supply of funds.

A survey by CNBC indicates that the Bank of Japan, or BOJ, is likely to raise its policy interest rate to 1.25% at this week's meeting amid inflationary pressure. About 89% of respondents expect the BOJ to raise rates by 0.25% given rising inflation and wages, as well as pressure from the U.S. government for Japan to continue its rate-hike cycle. This increase would reflect that the BOJ is accelerating its monetary tightening cycle, compared with the roughly six-month gaps between moves since it first began raising rates in March 2024, which ended more than eight years of negative interest rate policy dating back to 2016. The BOJ last raised rates this past June. The survey was conducted from September 9 to 14, gathering the views of 18 economists and analysts. Meanwhile, the Japanese government yesterday approved a plan to cut the consumption tax on food products, reducing the rate for food to 1% from the current 8%, effective in April 2027 for a period of two years. The government will also introduce additional support measures for low- and middle-income earners, effectively lowering their tax burden to 0%. The government confirmed it will not issue bonds to cover the budget shortfall and expects the measure to cost it about 5 trillion yen in lost revenue per year. Investors are also watching the impact of tighter monetary policy on the yen and the economy. The CNBC survey showed that 61% of respondents expect the yen to trade in a range of 155 to 160 yen per dollar next month. Homin Lee, a senior macro strategist at Lombard Odier, believes the BOJ's tightening will help the yen strengthen beyond 160 yen per dollar, though gains beyond 150 yen per dollar may be difficult. Carlos Casanova, a senior Asia economist at UBP, expects the BOJ to hold rates for now and eventually raise them by 0.25% every six months. Jesper Koll, an economy expert at Monex Group, expects the BOJ could raise rates by as much as 0.50% in a single move before pausing for a while.

The government bond market is the hot topic in global finance after 30-year US Treasury yields climbed to their highest level since the subprime crisis in 2007, while 10-year yields edge ever closer to 5%, also the highest since 2007, excluding the period of rate hikes by the US central bank, the Fed, in 2023. Japan is facing significantly elevated bond yields as well, with 10-year Japanese government bond yields breaking through 3% to set a new 30-year high, as did 30-year Japanese government bond yields. The main driver is that markets are questioning the credibility of borrowing countries amid sharply higher public debt across all countries since the COVID-19 crisis. US public debt now stands at a record 40 trillion dollars, roughly 120% of GDP, while Japan's public debt is as high as about 200% of GDP. Both countries also plan continued fiscal deficits amid the Fed's high interest rates and the Bank of Japan's upward interest rate trend, which will further compound the growth of public debt. Some investors are selling bonds and adjusting their portfolios, with knock-on effects pressuring both the US dollar and the Japanese yen toward weakness in recent months. And it is not only the US and Japan: other countries whose public debt has risen sharply and sits at high levels face similar risks.

The Global Markets Group of Bank of Ayudhya, or BAY, expects the baht to move within a range of 32.80 to 33.40 per dollar this week, from September 14 to 18, 2026, compared with last week, when it closed weaker at 33.05 per dollar after trading between 32.81 and 33.17 per dollar. Foreign investors bought 1.39 billion baht of Thai stocks and 1.747 billion baht of Thai bonds, respectively. The market will be watching the US central bank's meeting on September 15-16, at which a 25 basis point rate hike is expected after the US August consumer price index showed inflation has yet to return to target. The Bank of Japan is likely to raise its policy rate to 1.25% on September 18, while the European Central Bank raised rates to 2.50% and signaled that it will keep monetary policy tight. On the domestic front, Thailand's consumer price index rose 2.53% in August from a year earlier, accelerating from 1.95% the previous month but still within the Bank of Thailand's inflation target range of 1% to 3%. The Ministry of Commerce expects headline inflation of 2.37% in the third quarter of 2026, accelerating to 2.70% in the fourth quarter of 2026.

The US dollar strengthened while the yen traded near its strongest level in seven months, ahead of monetary policy meetings at the US Federal Reserve on Wednesday and the Bank of Japan on Friday, with markets widely expecting both to raise interest rates. Data from CME FedWatch showed investors pricing in an 86% chance that the Fed will raise rates at this week's meeting, after US consumer inflation accelerated in August. The yen weakened 0.3% to 154.03 per dollar but remained not far from 152.89 per dollar, its strongest level in seven months reached last week, as speculators turned net long on the yen for the first time since February. Meanwhile, Brent crude jumped 3% to 107.60 dollars per barrel after new Houthi attacks on Saudi Arabia and Iranian attacks on ships in the Gulf, compounding supply concerns after a key Saudi oil pipeline was shut down. The dollar index, which measures the dollar against a basket of six major currencies, rose 0.12% to 99.22.

The Global Markets team at Bank of Ayudhya expects the baht to move in a range of 32.80 to 33.40 baht per dollar this week, compared with last week's close of 33.05 baht per dollar, when it traded between 32.81 and 33.17 baht per dollar. Foreign investors bought 1.39 billion baht of Thai stocks and 1.747 billion baht of Thai bonds, respectively. The market will watch the US Federal Reserve meeting on September 15-16, where the market expects a possible 0.25% rate hike, while the Bank of Japan is likely to raise rates to 1.25% on September 18, with the market tracking signals on the frequency of rate adjustments ahead. The European Central Bank raised rates to 2.50% and signalled that it will keep monetary policy tight. On the domestic front, Thailand's consumer price index rose 2.53% in August from a year earlier, accelerating from 1.95% the previous month but still within the Bank of Thailand's inflation target range of 1-3%. Core consumer prices rose 1.44%. The Ministry of Commerce expects headline inflation at 2.37% in the third quarter of 2026 and accelerating to 2.70% in the fourth quarter of 2026.

Bitcoin fell 3.8% last week, and US spot bitcoin ETFs saw a net outflow of $462.7 million over four trading days. This week brings a string of policy decisions from the US Federal Reserve, the Bank of England and the Bank of Japan, which could create a tough macro environment for risk assets. The market broadly expects a 0.25-point rate hike at the US Federal Open Market Committee meeting on September 16, with CME's FedWatch putting the probability of a hike at 87.5%. The Bank of England is expected to hold its policy rate at 3.75% on September 17, while the Monetary Policy Committee is seen splitting 6 to 3 in the vote. Expectations are growing that the Bank of Japan will raise its policy rate by 0.25 point to 1.25% on Friday, which if realized would be the highest level since April 1995. The market capitalization of stablecoins rose about 0.6% from $307 billion at the start of the month to $309 billion as of September 13, while bitcoin's market share has fallen about 2% since September 4. BTC was trading at around $77,200 as of September 13, and $76,000, the midpoint of the bullish candle formed with volume on August 21, will be a key support line this week.

The U.S. Federal Reserve Board will hold a Federal Open Market Committee meeting on the 15th and 16th to discuss monetary policy. Fed Chairman Warsh stated plainly that employment is stable and that "the priority is price stability," and market expectations are growing that the Fed will proceed with its first rate hike in 3 years and 2 months, since July 2023. The August consumer price index released by the U.S. Department of Labor on the 11th rose 3.4 percent year-on-year, and the core index, which excludes volatile energy and food, accelerated to a 0.3 percent month-on-month rise, up 0.1 percentage point from the previous month. Against the backdrop of higher energy prices tied to the U.S.-Iran conflict, crude oil futures broke through the 100 dollars per barrel mark on the 10th, hitting a roughly four-month high. The European Central Bank decided on an additional rate hike on the 10th, and the Bank of Japan is also expected to raise its policy rate by 0.25 percent at its monetary policy meeting on the 17th and 18th. If Warsh decides to raise rates, tensions with President Trump, who is calling for rate cuts, will escalate sharply.

With a Japan-US central bank week looming, Japanese equities this week saw the Nikkei Average probing lower ground, driven by a broadening set of risk factors including sharp rises in Japanese and US bond yields, hawkish remarks from a senior Bank of Japan official, and escalating Middle East tensions. Next week brings the FOMC and the Bank of Japan's monetary policy meeting, and further increases in volatility warrant caution. This week, the US 10-year Treasury yield climbed to near 5%, while in the Middle East the United States and Iran again exchanged attacks, pushing up crude oil futures. According to the FedWatch tool, the probability of a 0.25-point policy rate hike at the September FOMC stands above 70%. On the Bank of Japan, board member Masu stated that the current policy rate of 1.0% remains below the lower bound of the estimated 1.1-2.5% nominal neutral rate and is therefore still accommodative, and it was reported that at the monetary policy meeting on the 17th and 18th, some expect a hike from 1% to 1.25%. The forecast range for the Nikkei Average next week is 62,000 to 65,000 yen.

The yen has strengthened about 3% against the dollar this month, touching its strongest level since February, on expectations that the Bank of Japan will accelerate interest rate hikes, combined with pressure from US Treasury Secretary Scott Bessent, who supports a stronger yen. As a result, the market is once again focused on the risk of unwinding yen carry trades, amid concerns that if investors rush to close positions, it could trigger selling and weigh on the rally in global stock markets, especially technology stocks, growth stocks, and emerging market assets. This week the yen strengthened past the key level of 155 yen per dollar and touched 152.89 yen per dollar on Tuesday, before moving around 154 yen per dollar at present. Meanwhile, hedge funds are positioning for the yen to strengthen past 150 yen per dollar by year-end, and some long-dated options are targeting 140 yen per dollar. Andrea Gabellone, head of global equities at KBC Securities, said the yen is one of the most important warning signals the global stock market is watching right now, because speculative positions remain elevated, with the biggest risk in technology stocks. Dilin Wu, a strategist at Pepperstone, said global growth stocks with high beta and expensive valuations tend to be hit hardest. David Clewell, co-manager of the Multi-Asset Global Income strategy at T. Rowe Price, said 152 yen per dollar is a key level to watch, because it is close to the exchange-rate assumption Japanese companies use in their earnings forecasts. If the yen strengthens past that level, profit growth at Japanese companies over the next 12 months could stall or turn negative. This situation differs from 2024, because the market has already almost fully priced in the possibility of a 0.25% rate hike at the September 17-18 meeting, and this round of yen appreciation has been more orderly. The BOJ's policy rate stands at 1%, up from 0.25% in 2024, and the Fed has cut rates in the recent period, reducing the yield differential from borrowing in yen to invest in dollar-denominated assets. Data from the Bank for International Settlements, or BIS, shows that yen-denominated loans and deposits by non-bank borrowers outside their home countries, used as one gauge of carry trade activity, stood at about 42 trillion yen in the first quarter, down from a record high of 45.7 trillion yen in late 2024, but still nearly double the level of a decade ago. The market's direction from here therefore depends on signals from BOJ Governor Kazuo Ueda about the rate outlook. BOJ officials have signaled they may be open to raising rates more frequently than every six months, but still want to preserve flexibility in setting policy in the future. Wei Li, global chief investment strategist at BlackRock, said that as Japan emerges from a long period of deflation and interest rates return to normal, the appeal of the yen carry trade is no longer as clear as it once was.

Japan's foreign exchange reserves plunged by a record $79.6 billion in August to $1.208 trillion, the steepest monthly percentage decline on record, after Tokyo mounted ¥15.4 trillion ($98.7 billion) of dollar-selling, yen-buying operations to pull the currency back from near 40-year lows. The contraction was driven mainly by an $87.7 billion reduction in overseas securities, chiefly U.S. Treasuries, which Tokyo liquidated to fund the intervention. With reserve limits constraining further action, market-implied probability of a 0.25 percentage point Bank of Japan rate hike at its September meeting has reached 98%, according to money market data from Tokyo broker Tanshi, and BOJ board member Kazuyuki Masu said the central bank will continue raising policy rates to keep underlying inflation from exceeding 2%. Investors seeking exposure to the world's third-largest economy can choose among the iShares MSCI Japan ETF EWJ, with $23.34 billion in net assets and a 20.1% year-to-date gain; the WisdomTree Japan Hedged Equity ETF DXJ, with $7 billion in net assets and a 20.2% gain; the iShares MSCI Japan Small-Cap ETF SCJ, with $262.7 million in net assets and an 18.8% gain; and the WisdomTree Japan SmallCap Dividend ETF DFJ, with $450 million in net assets and an 18% gain.

Bank of Japan board member Kazushige Masu said at a press conference in Fukui City on the 10th that regarding an additional rate hike, "after examining and verifying exchange rates, crude oil prices and all other factors in detail, we will thoroughly discuss it at the next meeting." The next monetary policy meeting is scheduled for the 17th and 18th of this month. The BOJ last raised rates in June, and having so far hiked at a pace of roughly once every six months, Masu noted that "even if it is September, if you call it an acceleration, then an acceleration it is." In a speech the same day, Masu said the underlying rate of inflation excluding temporary factors "remains below 2 percent, but is quite close to it," and at the press conference he said, "I am not currently worried about a large, rapid rise," adding that "once it reaches 2 percent, the biggest challenge will be to stabilize it smoothly." Regarding U.S. Treasury Secretary Bessent's repeated remarks urging the BOJ to raise rates, he explained that "as our country's central bank, we will make appropriate judgments on adjustments," stressing the BOJ's stance of keeping its policy conduct independent.

The euro traded near a two-week high ahead of the European Central Bank's policy decision, with markets expecting a second rate hike since the war began in late February to counter inflation pressure from energy prices. The euro touched a two-week high of 1.1654 dollars on Wednesday and was last trading around 1.1639 dollars, up 0.1%. Oil futures held above 100 dollars a barrel for a second day after energy exports from the Persian Gulf region fell sharply following the largest attack on shipping by Iran and the United States since the war began. The yen has strengthened more than 6% since official currency intervention in late July and traded around 153.525 yen to the dollar, near its strongest level in seven months, ahead of next week's Bank of Japan meeting, where the market expects a rate hike. The Chinese yuan traded offshore around 6.705 yuan to the dollar, near its strongest level in almost four years, after both producer and consumer inflation in China accelerated on higher energy costs.

We analyzed the impact of the rapid yen appreciation on the bitcoin market, focusing on the Bank of Japan's rate hike expectations and the unwinding of yen carry trades. The dollar-yen exchange rate fell from approximately 160.17 yen on September 1 to a temporary low of 152.89 yen, representing a yen appreciation of about 4.5%. This movement is attributed to expectations of additional rate hikes by the BOJ, with markets anticipating that the policy rate will be raised from 1.0% to 1.25% at the September meeting. The stronger yen exerts direct downward pressure on bitcoin prices quoted in yen, meaning that even if the dollar-denominated price remains unchanged, the exchange rate alone could cause a decline of approximately 500,000 yen. Additionally, while there are concerns that the unwinding of yen carry trades could lead to a global sell-off in risk assets, on-chain data does not yet show panic selling by short-term holders as seen in August 2024. The key focus going forward will be whether the dollar-yen rate breaks below 150 yen and the movement of the STH-SOPR, a profitability indicator for short-term holders.

The dollar weakened today, pressured by the yen's surge to near a 7-month high. The yen strengthened to 153.32 yen per dollar, close to the high of 152.89 yen per dollar set yesterday, and has risen 4% since the start of September. This has prompted investors to reassess the viability of yen carry trades amid expectations that the Bank of Japan (BOJ) will raise its interest rate by 0.25% to 1.25% at its September 17-18 meeting. Meanwhile, markets are focused on the release of the U.S. CPI index on Friday, with analysts expecting headline CPI to rise 3.4% year-on-year and 0.4% month-on-month, while core CPI is expected to increase 2.4% year-on-year. The latest CME Group FedWatch Tool indicates that investors assign a 62.2% probability that the Fed will raise interest rates by 0.25% on September 16, and only a 37.8% probability that the Fed will hold rates at 3.50-3.75%.