Major investors have reported that the Bank of Japan is considering raising rates to 0.25%.
He global dollar traded with a slight drop this Tuesday, while large investors closely follow the performance of the and in Japanese, which was strengthened by the possibility that The Bank of Japan (BoJ) raise rates this week.
He dollar indexThe U.S. dollar, which compares the greenback to a basket of other major currencies, closed at 104.55 yen, down just 0.03 percent from Monday. The greenback, meanwhile, lost 0.47 percent to 153.29 yen and has been falling against the Japanese currency since hitting a 38-year high of 161.96 yen on July 3.
The influence of the yen and the Bank of Japan
The Bank of Japan is holding a two-day meeting at which it will announce its interest rate decision on Wednesday. A further rate hike is expected, following the March hike, which was the first in 17 years. Markets are currently pricing in the possibility of a 10 basis point hike at just over 50%.
This would be up from the current 0-0.1% and more than the market is currently pricing in, with a 10 basis point increase still seen as only a 55% probability.
Japan’s central bank will also detail plans to reduce its massive bond purchases as it pulls back from a decade of massive monetary stimulus.
Shaun Osborne, chief currency strategist at Scotiabank in Toronto, said: “The yen has moved quite a bit on the day. Some people thought this move had probably already happened, but I think there’s still the potential for some of these carry trades and some of the positioning to unravel a bit more.”
The Fed meeting
The United States Federal Reserve (Fed) The Fed is also expected to announce its decision on Wednesday and is expected to keep rates steady, although markets are betting that the US central bank will begin to cut rates at its next meeting in September.
Investors will be watching for any clues from Fed Chairman Jerome Powellcan drop at his press conference about how soon policymakers are willing to cut rates.
Source: Ambito
