USD/JPY Soars Near Two-Week High as BoJ Rate Hike Looms

The Japanese Yen (JPY) traded near its two-week low against the US Dollar (USD) on Friday, ahead of the Bank of Japan's (BoJ) interest rate decision. The USD/JPY pair rose to a two-week high, reaching above 156.00 after data showed that Japan's Consumer Price Index (CPI) held steady at 1.9% year-over-year in August.

The core inflation rate unexpectedly eased to 1.7%, below the central bank's 2% target. This tempered expectations of a more hawkish BoJ and provided a modest lift to the USD/JPY pair. Traders are still pricing in a greater chance of a follow-through up move in December after the widely expected BoJ rate hike this Friday.

BoJ Governor Kazuo Ueda's comments during the post-meeting press conference will be scrutinized regarding the precise timing and pace of future tightening. The outlook will play a key role in driving the JPY and providing a fresh impetus to the USD/JPY pair.