Fed, Japan eye rate hikes amid inflation, weak yen

Traders are increasingly betting on interest rate hikes from both the U.S. Federal Reserve and the Bank of Japan (BoJ). The yen's significant weakening against the dollar, nearing 160, is pressuring the BoJ to act, especially with rising bond yields and potential carry trade unwind. A Bank of Japan policy meeting summary indicated internal discussion of a larger rate hike due to Middle East conflict impacts on inflation. Such a move could reverse global capital flows, negatively impacting risk assets like bitcoin, which have benefited from years of ultra-low Japanese rates.