Yen Weakens Ahead of Expected BOJ Rate Hike

The yen started weakly against the dollar and euro on Friday as Asian trading began. Markets were subdued ahead of an expected rate hike from the Bank of Japan, with the yen falling by 0.1% to 156.19 yen per dollar.

A rate increase is seen as 83% likely by market analysts, with quarterly hikes expected to follow. This has led some traders to believe that the rate decision itself may have limited impact on the yen's value.

According to Chris Weston, head of research at Pepperstone Group in Melbourne, 'Given the degree of pricing, the rate decision itself may have limited impact on the yen. Instead, attention should fall on the forward swaps curve and the bank's guidance around the pace and urgency of further tightening.'