USD/JPY Breaks Above 161 to 40-Year High After Hawkish FOMC

USD/JPY closed the week above 161 at its highest level since 1986 after the FOMC struck a hawkish tone on June 22. The pair had already spiked to 161.81 on June 21 despite the Bank of Japan raising rates to 1% on June 16 and spending over $70 billion on interventions. Verbal warnings from Finance Minister Kato and Deputy Governor Himino failed to reverse the move as wide yield differentials and carry trades kept supporting the dollar. Markets now focus on whether Tokyo will escalate actual intervention.