FX.co ★ Yen Steadies as Traders Weigh BOJ Outlook

The Japanese yen was steady around 159.2 per dollar on Thursday, trading in a narrow range as investors continued to evaluate the outlook for Bank of Japan (BOJ) monetary policy. Markets are now pricing in roughly an 87% probability of a 25-basis-point BOJ rate hike in September, which would bring the policy rate to 1.25%. That is a sharp increase from about 23% prior to the central bank’s July meeting.

Earlier this week, former BOJ board member Seiji Adachi said the central bank is likely to raise rates next month and again as early as January. He warned that keeping rates unchanged could spark another bout of yen selling and further intensify import-driven inflation.

Investors are now looking ahead to a speech later in the day by BOJ Deputy Governor Ryozo Himino for additional policy signals. Meanwhile, BOJ Governor Kazuo Ueda will miss the Federal Reserve’s annual Jackson Hole symposium this week due to a scheduling conflict.