Dollar Slips Against Yen Ahead of BOJ Rate Decision

The US Dollar has slipped against the Japanese Yen ahead of the Bank of Japan's interest rate decision on Friday. The pair traded near 156.00 after reaching a session high at 156.32 and a low at 155.34, with the Bank of Japan expected to raise its policy rate by 0.25% to 1.25%. This move is priced at 100%, but some market participants expect a larger increase.

The Bank of Japan's decision comes as Japanese inflation remains below target, with the consumer price index excluding fresh food forecast to remain at 1.8% in August. The Bank's own outlook suggests that underlying inflation will accelerate above 2% later this year due to wage pass-through and a weak currency.

However, the market does not expect the next rate hike to happen quickly, with a quarter-point increase seen as more likely than a larger move. The pricing also carries a slightly higher rate of 0.268%, indicating that some investors are positioned for something larger.