Yen Consolidates Ahead of BOJ Policy Decision
The yen traded in a tight range with the Bank of Japan widely expected to keep its key rate unchanged at its policy decision later on Thursday.
USD/JPY was little changed at 153.41 in early Asian trade; pair is set to gain 6.9% this month the biggest rise since November 2016.
The BOJ’s benchmark interest rate will remain unchanged at 0.25%, according to all but one of 53 economists surveyed by Bloomberg, as markets brace for the US election and after Japan’s polls resulted in a lack of clarity over its next government.
BOJ’s guidance may have a hawkish tilt as the central bank should be focusing on inflation and wage pressures despite the political uncertainty, said Nick Twidale, chief analyst at ATFX in Sydney.
“How much of an impact it will have on the yen is going to be interesting to see - if indeed they do take that route - as obviously the trend is still very much against yen strength at the moment”.
The yen has weakened on 11 of the past 12 BOJ decision days, and may do so again should there be a dovish hold from the central bank, said Win Thin, head of markets strategy at Brown Brothers Harriman in New York.
“The only exception was July 31, when the BOJ delivered its hawkish surprise. Given the market fallout in early August, I don’t think the BOJ will be doing that again anytime soon”.
The Bloomberg Dollar Spot Index edged up 0.1% while the yield on two-year Treasuries eased one basis point to 4.17%.
After the BOJ decision, market focus will shift to US personal consumption expenditures data — the Fed’s preferred measure of inflation — as GDP and private jobs data indicated the US economy remains robust.
AUD/USD slipped 0.1% to 0.6567; pair is set fall 5% in October, the biggest monthly drop since September 2022.
Australia September retail sales rose 0.1% m/m, below 0.3% estimate.
China’s official manufacturing and non-manufacturing PMI data due later on Thursday.
EUR/USD steady at 1.0857.
Eurozone core CPI expected to slow to 2.6% in October from 2.7%, according to Bloomberg survey.
Source : Bloomberg
