FX.co ★ Japanese Yen Firms as BOJ Meeting Looms

The Japanese yen advanced towards 158 per dollar on Friday, extending its upward trend from earlier in the week. Investors are eagerly anticipating the Bank of Japan's forthcoming policy meeting for any insights into its interest rate adjustment plans. While the central bank is largely expected to maintain its current policy stance next week, market expectations suggest a potential rate increase by June. Kazuo Ueda, the Governor of the Bank of Japan, has reaffirmed the institution's readiness to elevate rates should economic and price conditions align with projections. The yen also gained support this week amidst concerns over possible official intervention as it neared the critical 160 mark, with Japanese authorities expressing concern over rapid, unidirectional currency shifts. Additionally, speculation persists that Prime Minister Sanae Takaichi might call a snap election next month to facilitate more assertive fiscal spending, which continues to exert pressure on the yen. Reports indicate that Takaichi is scheduled to brief ruling bloc officials with further details on the potential dissolution of the lower house on January 19.