BoJ Tone Could Lift JPY Against USD
Commerzbank's Volkmar Baur expects the Bank of Japan to keep its overnight call rate unchanged at its monetary policy meeting early Friday. The market is pricing this in at 99.3%, with all analysts surveyed by Bloomberg agreeing on this outcome.
The focus will be on guidance, as inflation has stabilized at around 2% and leading indicators point to rising inflationary pressure. This could lead to a slightly hawkish tone from the Bank of Japan, which would surprise the market and potentially support the Japanese yen.
A change in communication style is key for the yen's performance. If the BoJ Governor Kazuo Ueda brings October into play as a possible interest rate hike date, this could have a positive impact on the currency.
On the other hand, if the Bank of Japan uses boilerplate language again, the yen may hit new lows against the US dollar.