BoJ Decision to Guide Japanese Yen's Direction Against US Dollar

The Japanese Yen (JPY) is waiting for direction from the Bank of Japan's (BoJ) interest rate decision on Friday, after the Federal Reserve (Fed) raised its target range by a quarter-point to 3.75%-4.00% on Wednesday.

Markets are largely pricing in a 25-basis-point increase from the BoJ, which would lift the policy rate from 1.00% to 1.25%, its highest level in around three decades, according to a Reuters poll that found 97% of economists expect a hike.

A rate increase accompanied by a signal for another move could strengthen the JPY, but if the BoJ raises rates without clear guidance on future policy, it may trigger profit-taking and allow the USD/JPY pair to rebound.