Yen Weakness Ahead of BOJ Rate Hike Decision

The Japanese yen is showing weakness against major currencies in Asian trading on Friday, ahead of an anticipated interest rate hike from the Bank of Japan.

Data released on Friday showed that inflation fell slightly short of expectations in August, but swaps pricing indicates a strong likelihood of a rate increase, with a 83% probability of a hike viewed by the market.

This means that investors expect further tightening from the BOJ, with quarterly rate hikes expected to follow. Chris Weston, head of research at Pepperstone Group, notes that 'given the degree of pricing, the rate decision itself may have limited impact on the yen.'

The Japanese central bank's press conference will be closely watched for confirmation that further normalization remains a priority and whether there is an urgency to move again.