With the yen trading in the ¥160 range, the BOJ meeting and comments from Vice Governor Uchida will be in focus as the market assesses the possibility of further rate hikes and the impact of developments in the Middle East.
Although ceasefire reports temporarily brought a sense of relief, the yen has struggled to hold the ¥160 range, and the BOJ's next move is now the market's focus. Central to this will be the direction of policy rates at the BOJ meeting and remarks from Vice Governor Uchida Shinichi (ウチダ シンイチ), who has been absent from the hospital for an extended period.
Reports of a peace agreement in the Middle East have had little impact on the yen, while views surrounding government intervention remain in circulation. Meanwhile, equity and bond markets have reacted to news concerning Iran and other developments, and expectations are spreading that the outlook for inflation and energy prices will affect Japan's import costs.
Vice Governor Uchida is expected to speak while Governor Ueda (上田氏) is absent and outline the outlook for monetary policy, but some observers say that a cautious stance could persist and potentially intensify downward pressure on the yen. Alongside developments in Governor Ueda's speaking schedule, uncertainty in the market over the outlook for monetary policy is increasing.
Although the market is pricing in an additional rate hike in the autumn, it remains unclear whether the BOJ will provide a strong indication of its policy direction. The yen's course is expected to depend on developments at the Federal Reserve and movements in crude oil prices.