Bank of America: If the Bank of Japan takes a hawkish stance on rate hikes next week, it will support the yen

Odaily Odaily Planet Daily News According to Shusuke Yamada, a foreign exchange and interest rate strategist at Bank of America Global Research, if the Bank of Japan adopts a hawkish stance and raises interest rates at its meeting next week, it is expected to provide support for the yen. He noted that the market has already priced in expectations of a rate hike.

Current market pricing indicates that following this rate hike, the probability of another rate increase at the October meeting is approximately 50%. If the market's pricing probability for an October rate hike rises above 60%, and the pricing probability for a further rate hike at the March meeting of the following year exceeds 50%, the market is likely to interpret this as a "hawkish" stance. Therefore, the market's focus will be on the guidance provided by the Bank of Japan regarding its future policy rate path at next week's meeting. (Jin Shi)