BoJ Rate Hike Looms as Aussie and Kiwi Dollars Test Yen Resistance
The Australian and New Zealand dollars are trading near their highest levels against the Japanese yen in weeks ahead of the Bank of Japan's expected rate hike on Friday. The BoJ is set to raise its rate to 1.25%, which would be the highest since 1993, making it a key event for currency traders.
The unwind of the trade that borrowed yen cheaply to buy currencies paying more has already begun, with speculators turning long on the yen in the week ending September 8. However, banks and leveraged money that borrow yen directly have yet to file their weekly reports, suggesting some selling may still be ongoing.
New Zealand's economy grew 0.2% in the second quarter, beating forecasts but still managing only a fifth of its previous quarterly growth rate. The Reserve Bank of New Zealand raised its rate to 2.75% on September 2 and is expected to increase it again this year as headline inflation reaches 4.1%, or 2.9% once vehicle fuel is excluded.