The Japanese yen fell in European trade on Tuesday on track for the third loss in a row against the dollar ahead of the Bank of Japan’s policy meeting later today.
The BOJ is expected to maintain interest rates unchanged as concerns grow about outside economic risks.
The Price
The USD/JPY pair rose 0.4% today to 149.78 yen per dollar, the highest since March 5, with a session-low at 149.10.
The yen lost 0.4% on Monday, the second loss in a row amid an improving risk appetite in the markets.
The BOJ
Later today, the BOJ will convene with the decision due tomorrow, expected to hold rates at 0.5%, the highest since 2008.
BOJ policymakers will discuss the impact of the US trade war on Japan’s export based economy, which will determine the timing of the next interest rate hike.
Concerns about a global economic slowdown prompted by US President Trump’s tariffs could weigh on Japanese wages and consumer prices, which are approaching the 2% target.
BOJ Governor Kazuo Ueda stated ahead of the Diet last week that he expects a revival in consumption, but he remains very concerned about outside economic uncertainty.
Reuters reported that BOJ policymakers believe the economy is on the right track but global economic uncertainties could impact the timing of the next BOJ rate hike.
Japanese Yields
Japan’s 10-year government treasury yields fell 0.75% today to a week low at 1.495%, pressuring the yen.
It comes amid an improving risk appetite in the markets, while the odds of a Japanese interest rate hike in the first half of the year receded.
