Japanese Yen Weaks Amid Anticipation of Fully Priced Bank of Japan Hike

According to Scotiabank strategists Shaun Osborne and Eric Theoret, the Japanese Yen (JPY) is currently underperforming its G10 peers. It has weakened by 0.7% against the US Dollar (USD). This trend is observed alongside the New Zealand Dollar (NZD) and Swedish Krona (SEK), both of which are also exhibiting relatively weaker performance.

The focus for markets remains on Friday's Bank of Japan (BoJ) meeting, where a hike in interest rates is anticipated. However, this move is seen as fully priced by market participants. Despite the anticipation surrounding the BoJ meeting, recent data releases have been limited, with trade data scheduled for Wednesday and Consumer Price Index (CPI) data due on Friday.

The USD/JPY pair has recently tested lows around 153 and may find additional support near 152. Meanwhile, resistance is seen above 155. Osborne and Theoret flag these levels as key indicators of the currency's performance in relation to the BoJ meeting.