Fed and BOJ Rate Hikes Loom, Will Yen Rally?

Traders are bracing for a rare synchronized tightening of monetary policies this week as both the Federal Reserve and the Bank of Japan (BOJ) are leaning towards raising interest rates within 48 hours of each other.

The Fed's decision is expected on Wednesday, with futures markets pricing an over 80% chance of a quarter point increase. The BOJ will follow two days later, on Friday.

A CNBC survey of 18 economists found that 89% expect the BOJ to raise its benchmark rate by 25 basis points to 1.25%, a fresh three-decade high. Respondents cited accelerating inflation, rising wages, and pressure from Washington as reasons for this move.

However, not all experts agree on the pace of the hike. Jesper Koll, expert director at Monex Group, expects a single 50 basis point move instead. Carlos Casanova, senior economist for Asia at Union Bancaire Privée (UBP), is more cautious and believes that the BOJ will hold steady, arguing that the data does not yet support a faster hiking cycle.

The yen's trading range is also expected to be impacted by these rate hikes, with about 61% of respondents seeing it trading between 155 and 160 per dollar over the next month.