Japan Rate Hike Expectations Send Yen Plummeting

The Bank of Japan's upcoming decision on Friday has Wall Street strategists expecting a weaker yen. According to Golden Ten Data, analysts from Wells Fargo and Citigroup have priced in expectations of a rate hike by the central bank. However, if the Bank of Japan disappoints investors with a less hawkish stance than expected, it could trigger a sell-off in the yen.

Strategists warn that a failure to meet market expectations could lead to a significant depreciation of the yen. Citigroup believes the yen may fall to 159 against the US dollar in the coming weeks, while Wells Fargo's Chidu Narayanan wrote that 'the risks are tilted toward a result that is more dovish than market pricing.'

The current reversal in the yen comes after a sharp rally earlier this month. The Bank of Japan faces a high bar to meet these market expectations, and it's even harder to outperform them.