The hope is that falling inflation reduces the need for interest rate hikes, and markets have priced better-than-even odds that the Federal Reserve slows its cracking pace and hikes by 25 basis points, rather than 50, at next month’s meeting.
Boston Federal Reserve bank leader Susan Collins also helped things, remarking to the New York Times that she was leaning towards a 25 basis point hike. The Bank of Japan stunned markets last month by widening the band around its 10-year bond yield target, a move that triggered a sudden rise in yields and a jump in the yen.
BOJ Governor Haruhiko Kuroda is due to make remarks later in the day. The yen rose about 0.5 percent in otherwise quiet currency trade to 131.84 per dollar. Japanese government bond futures fell to almost eight-year lows.