Why is the yen rising despite higher oil prices, which typically weaken Japan's currency?

The yen is rising because a once-crowded short trade is being unwound amid bets on faster Bank of Japan (BOJ) rate hikes; the rally gained momentum after comments from U.S. Treasury Secretary Scott Bessent and speculation about Japanese investors repatriating overseas assets into domestic bonds, and became self-reinforcing as stop-loss orders triggered wave after wave of short-covering amplified by algorithmic trading.

What key market events are expected this week that could influence global financial markets?

This week’s key market-moving events include the European Central Bank’s policy decision on Thursday, U.S. Producer Price Index (PPI) data on Thursday and Consumer Price Index (CPI) on Friday, UK GDP data on Friday, and next week’s Bank of Japan meeting on Thursday and Friday — where guidance on the pace of further tightening will be crucial despite a quarter-point rate hike being almost fully priced in.

Morning Bid: Brent Crude Nears $100, Yen Defies Gravity

Sep 8, 2026

Brent crude approaches $100 per barrel amid escalating Middle East tensions, impacting global risk appetite. Meanwhile, the Japanese yen strengthens against the dollar despite high oil prices, driven by Bank of Japan rate hike expectations.

reuters

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