BOJ Hike Decision Looms, Market Eyes Ueda's Forward Guidance

The Bank of Japan is expected to raise its policy rate by 25 basis points to 1.25% today, but market attention has shifted to Governor Kazuo Ueda's forward guidance.

The current yield curve already prices in four rate hikes over the next year, setting a high bar for Ueda to confirm a rapid tightening cycle and support the yen.

An exceptionally hawkish tone from Ueda would be necessary to keep the yen strong, but any dovish remarks could lead to USD/JPY reclaiming lost ground since September.