Yen selling prevailed ahead of the announcement of the Bank of Japan's monetary policy meeting decision, with USD/JPY trading in the ¥156 range. A 0.25% rate hike is seen as almost certain, so little attention is being paid to the size of the hike itself, while concerns over the interest-rate outlook appear to be easing.
USD/JPY rose as the yen weakened to around ¥156.32 in Tokyo morning trading, with a 0.25% rate hike at the Bank of Japan's monetary policy meeting seen as almost certain. The size of the hike itself is attracting little attention, and the market appears less inclined to be overly wary of a hawkish statement or comments from the Bank of Japan governor. Some believe that a sharp rate hike remains difficult for Japan's economy, where zero and low interest rates have persisted for an extended period.
The yen continued to weaken, trading at around ¥179.46 against the euro, ¥208.81 against sterling and ¥111.26 against the Australian dollar.
The background is a growing market view that the Bank of Japan will maintain a measured pace of rate hikes even as pressure from the US Treasury Secretary is being discussed.