BoJ Rate Hike Weighs on Japanese Yen, Traders Trim ECB Expectations

The Japanese Yen has weakened against major currencies, including the US Dollar and Euro. The Bank of Japan (BoJ) raised interest rates by 25 basis points to 1.25%, a level not seen in 31 years. Two BoJ board members, Toichiro Asada and Ayano Sato, opposed this decision. The central bank warned that inflation might exceed the 2% target due to recent Yen depreciation.

Analysts at MUFG note that the BoJ is prepared to intervene again if the Yen continues to weaken. This move came ahead of a 3-day holiday period with lower liquidity for USD/JPY trades.

On the Euro front, traders have trimmed their expectations for hawkish European Central Bank (ECB) decisions due to a sharp correction in oil prices. The WTI Oil price has retreated below $92 from its recent high of $102.11 on hopes of increased energy supply from Saudi Arabia.