Yen selloff set to halt without another push from US inflation

TOKYO: The yen appears to be at the mercy of American inflation expectations, which means the current selloff is likely to stall unless US rates keep moving higher.

The ratio between three-month call and put options on the dollar-yen currency pair – a so-called risk-reversal – has been tracking closely a commonly used measure of market expectations for US consumer price gains, the five-year five-year forward rate. And with inflation expectations surging, that dynamic has helped make the Japanese currency the worst performer this month among Group-of-10 peers.