Interest rate expectations in the US have changed: The Japanese yen strengthened against the dollar

The Japanese yen strengthened to its highest level in a week against the dollar as a selloff in U.S. equities pushed Treasury yields lower and shifted expectations for Federal Reserve policy. Market-implied odds of a December rate hike fell to roughly 70% from above 80%, reflecting traders' reduced conviction that the Fed will tighten again this year. The yen's move matters because it signals how quickly currency markets reprice when U.S. rate expectations soften, with the equity selloff transmitting directly into bond yields and the dollar. Investors now await the upcoming U.S. employment report, which could either reinforce or reverse the revised rate-hike expectations and set the near-term direction for the dollar-yen pair.