Svmuureports that Shusuke Yamada, a foreign exchange and interest rate strategist at Bank of America Global Research, stated that if the Bank of Japan (BOJ) takes a hawkish stance with a rate hike at its meeting next week, it is expected to support the yen. He noted that the market has already priced in the rate hike expectations.
Current market pricing suggests that after this rate hike, the probability of another rate increase at the October meeting is around 50%. If the market-assigned probability for an October rate hike rises to above 60%, and the probability for a further rate hike at the subsequent March meeting exceeds 50%, the market is likely to interpret this as a "hawkish" stance. Therefore, the market's focus will be on the guidance the BOJ provides regarding its future policy rate path at next week's meeting. (Jinshi)