Impact Of BoJ Hike And MoF Intervention On Yen

J.P. Morgan expects the upcoming BoJ policy decision to result in a 25bp hike, yet it remains unlikely to trigger significant yen appreciation compared to 2024. Market participants have largely priced in both the rate hike and the potential for MoF intervention.

Key Takeaways

• 1.A 25bp BoJ rate hike is widely expected next week, but the bar for a hawkish surprise is high; risks are skewed toward a dovish interpretation.
• 2.Unlike the 2024 scenario, current market positioning and US macro data suggest that BoJ hikes and MoF intervention are unlikely to trigger a sharp JPY appreciation.

Table of Contents

• BoJ: Hurdle for a hawkish surprise is high
• If the yen weakens further after the BoJ policy meeting, there is a possibility that intervention will be carried out, but...
• ...aBoJ hike and MoF intervention are unlikely to produce a sharp Yen rally: Comparison with 2024