ANZ Predicts 25bp BoJ Hike, 50bp Could Send USD/JPY to 150

Market expectations are already priced in for a modest Bank of Japan (BoJ) rate hike, according to ANZ Research. The upcoming September BoJ meeting will be closely watched for forward guidance, with markets expecting around 90 basis points of additional hikes. Given this pricing, ANZ believes it's unlikely the BoJ will adopt a more hawkish stance than current expectations.

This means a 25 basis point hike is still on the table, and ANZ maintains a modestly positive view of USD/JPY. They predict the pair to move towards 155-156 if markets are correct about future rate increases. However, there are two other scenarios that could play out.

If the BoJ's commentary turns out to be particularly hawkish, bringing forward additional hikes at intervals shorter than quarterly, USD/JPY may remain near current levels. On the other hand, a 50 basis point hike, as suggested by BoJ member Hajime Takata, would likely push USD/JPY towards 150.