BoJ Hawkish Tone Could Lift Japanese Yen
The Bank of Japan (BoJ) is expected to keep its overnight call rate unchanged at its upcoming monetary policy meeting on Friday. According to Commerzbank, all analysts surveyed by Bloomberg agree that the BoJ will leave interest rates untouched.
Volkmar Baur from Commerzbank expects a slightly hawkish tone from the BoJ could support the Japanese Yen against the US Dollar. A hawkish tone would put October on the table as a potential rate hike month, which is earlier than the market's current expectation of December.
The economic situation in Japan appears to be improving, with inflation stabilizing at around 2% and leading indicators pointing to rising inflationary pressure. If the BoJ delivers a more optimistic outlook, it could boost the Japanese Yen.