BOJ Rate Hike Odds Top 70% as Central Banks Prepare to Make Key Decisions

The global financial market is entering a super central bank week, with the U.S. Federal Reserve and the Bank of Japan (BOJ) set to announce their rate decisions back-to-back.

The probability of a BOJ rate hike this Friday has already surpassed 70%, and uncertainty over the future policy path is emerging as the biggest variable driving yen carry trade unwinding and global risk asset movements.

The yen has appreciated roughly 4% since the start of September, with speculators having flipped to net long yen positions for the first time since February.