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USD/JPY holds a tight range as yen softens ahead of BoJ in September
Scotiabank says markets have lifted pricing for potential Bank of Japan tightening by about 20 basis points, and attention is shifting to the tone after the September 18 meeting.
USD/JPY has been trading in a relatively flat band, between 158.00 and the mid-159s, as the Japanese yen underperforms most G10 currencies, according to Scotiabank strategists Shaun Osborne and Eric Theoret.
Scotiabank said media reports that major banks have moved their Bank of Japan tightening calls to September have increased pricing by roughly 20 basis points, leaving room for further upside if the central bank signals more tightening later.
The strategists added that traders are also looking beyond the September 18 meeting for the BoJ's tone, which could influence how the pair moves after expectations are re-priced.
In the meantime, the yen was described as soft, down about 0.1% versus the US dollar, while it was underperforming all G10 currencies except the Norwegian krone.
Latest closeUSD/JPY 159.31 ▼0.1%