BOJ Rate Hike Looms as Nikkei Parties Past 69,700 and Bitcoin Tags Along for the Ride 🪩

Japan's Nikkei 225 crossed 69,700 for the first time on Monday, reaching an intraday high of 69,705 as news of a US-Iran agreement to end their conflict triggered a broad risk-asset rally. The benchmark added roughly $465 billion, or 77.22 trillion yen, in market value before paring gains to settle near 69,234 at press time. South Korea's KOSPI led regional gains with a 5.46% surge, while Japan's Topix climbed 3.3%.

The rally was fueled by President Donald Trump's announcement of a deal to halt the US naval blockade of Iran and reopen the Strait of Hormuz, a critical oil corridor. The agreement is scheduled to be signed in Switzerland on Friday. Crude prices fell on the news, with West Texas Intermediate down about 4.6% and Brent Crude off roughly 5%, while US equity futures pointed higher: Dow Jones Industrial Average futures rose 342 points, or 0.7%, S&P 500 contracts gained 0.9%, and Nasdaq 100 futures added 1.4%.

Digital assets tracked equities higher. Total crypto market capitalization rose close to 2%, and Bitcoin ($BTC) pushed toward 66,000.

The Bank of Japan (BOJ) is scheduled to announce its rate decision on Tuesday, June 16. According to a Bloomberg survey, 49 of 51 economists expect the central bank to lift its policy rate from 0.75% to 1%, with market-implied probability above 90%. A Reuters poll indicated economists expect a follow-up hike to 1.25% in the fourth quarter.

Higher Japanese rates can reduce the appeal of the yen-funded carry trade, a strategy in which investors borrow yen at low rates to purchase higher-yielding assets abroad, including equities, bonds, and cryptocurrencies. Because a rate increase is widely priced in, participants may focus on the BOJ's forward guidance for signals on the pace of further tightening.