Yen Weakens Ahead of BoJ Rate Hike

The yen began weakly against the dollar and euro as Asian trading started on Friday. This softness comes ahead of an expected rate hike from the Bank of Japan (BoJ), which is considered a certainty with swaps pricing indicating a likelihood of 83 per cent.

Japanese inflation data released on Friday showed that inflation fell short of expectations in August, further solidifying market views on an upcoming interest rate increase. The yen declined by 0.1 per cent to 156.19 yen per dollar and was 0.2 per cent weaker against the euro at 179.3000 yen.

Chris Weston, head of research at Pepperstone Group in Melbourne, noted that 'given the degree of pricing, the rate decision itself may have limited impact on the yen.' He emphasized the importance of Governor Ueda's press conference, where markets will be looking for confirmation that further normalization remains on the table and assessing whether the Bank sees any urgency to move again.