Yen Weaks Ahead of Expected BOJ Rate Hike

The yen began Friday's Asian trading session weakly, falling 0.1% to 156.19 yen per dollar as traders anticipated a rate hike from the Bank of Japan later in the day.

This move followed data released on Friday showing Japanese inflation fell slightly short of expectations in August, and market pricing indicates an 83% likelihood of the BOJ lifting interest rates to their highest level in over three decades.

Chris Weston, head of research at Pepperstone Group, noted that 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.