BoJ Hawkish Stance Sends Yen Trading Defensively Amid Rate Hike Anticipation

The Japanese Yen is trading defensively after its sharp rally in late August, Scotiabank strategists Shaun Osborne and Eric Theoret noted. The USD/JPY is edging higher as investors anticipate a 25 bps hike from the Bank of Japan on September 18. The BoJ's messaging has been unequivocally hawkish, according to Osborne and Theoret.

The yen showed its first notable signs of weakness since its 3.7% rally on August 31, trading fractionally lower against the USD. The focus remains centered on the BoJ, with a widely anticipated rate hike almost fully priced in. For USD/JPY, support is seen around 153, while short-term resistance is above 155.