JPY Surges on Katayama Comments and BOJ Hike Bets; Asia Rallies

The Japanese yen has strengthened sharply following comments from Finance Minister Katayama calling for measures to address yen weakness, reinforcing expectations of coordinated policy action. Japan's producer prices accelerated to their fastest pace since 2023, keeping the Bank of Japan firmly on track for further rate hikes. The data adds to the case for BOJ tightening, with markets pricing higher odds of a near-term move. USD/JPY has declined as yen bulls gain confidence from both verbal intervention and fundamental support. Meanwhile, reports that Japan may press GPIF to increase domestic asset allocations have raised concerns about BOJ independence amid the ongoing JGB selloff. Across the region, Asian equities rallied on a semiconductor sector rebound and easing Iran risk. South Korea's finance officials noted the won remains misaligned, expecting relief in H2. Citi's $75 Brent base case for Q3 assumes a US-Iran deal and Hormuz reopening. Key USD/JPY support sits near recent lows, with a break potentially accelerating toward levels that could prompt official intervention.