LONDON—Japan’s yen surged on Friday and is on track for its biggest weekly rise in four months against the dollar on bets that U.S. interest rates are nearing a peak after data showed the world’s biggest economy unexpectedly contracted in the June quarter.
Futures markets predict that U.S. interest rates will peak by December this year compared with June 2023 at the start of July and the Federal Reserve will cut interest rates by 50 bps next year to support slowing growth.
The upshot of this rapid drop in rate rise expectations has been a big driver for the dollar’s weakness against the yen with the greenback slumping nearly 2.5 percent versus the Japanese unit this week, its biggest weekly drop since late March….