Yen cedes some ground ahead of critical BOJ test
BOJ) kicked off its two-day monetary policy meeting, with traders nervously awaiting a decision on whether the dovish central bank could finally unwind its ultra-loose monetary settings.
In the broader market, currencies started the week on a cautious note after large swings last week mainly driven by a slew of central bank meetings, which included rate decisions from the Federal Reserve, the European Central Bank (ECB) and the Bank of England (BoE).
The yen fell 0.2% to 142.41 per dollar in early Asian trade, reversing some of the nearly 2% gain it made last week on the back of the dollar's decline.
The Japanese currency has had a volatile few weeks as markets struggle to get a grip on how soon the BOJ could phase out its negative interest rate policy, with comments from Governor Kazuo Ueda earlier this month initially sparking a huge rally in the yen.
That was later reversed on news that a policy shift was unlikely to come as early as December, and investors now await Tuesday's BOJ decision for further clarity on the bank's rate outlook.
«The meeting will be relevant and important in terms of what the BOJ does, and there are some in the market that still expect that maybe there's a surprise,» said Rodrigo Catril, senior FX strategist at National Australia Bank.
«We tend to lean to the idea that they're still on wait-and-see mode… for more evidence, in particular the labour market and wages growth are rising towards the 2% level, at the minimum.
»The best case scenario would be for the bank to set the stage for things to come in 2024, conditional on these economic outcomes being delivered."
Against the euro, the yen edged 0.1% lower to 155.11.
The Australian dollar rose 0.13% to 95.45 yen.
RATE CUTS LOOM?
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