Yen Slips to 156.19 as BOJ Hike Looms

The Japanese yen opened lower against the dollar and the euro in Asian trading. The currency fell 0.1% to 156.19 per dollar. This move reversed a three-day losing streak seen on Thursday. Against the euro, the yen traded 0.2% lower at 179.3000. Market sentiment remained subdued ahead of the central bank's decision.

The decline followed August inflation data that came in slightly below expectations. Swap pricing indicates an 83% chance of a rate hike according to LSEG data. The market expects quarterly increases to follow this initial move. Analysts note that the decision itself may have limited impact due to heavy pricing. Attention is shifting to the forward swaps curve and future guidance.

Market focus shifts to central bank guidance

Chris Weston of Pepperstone Group stated that the press conference is the key event. Traders seek confirmation that further normalization remains on the table. They are assessing whether the bank views any urgency to move again. The decision will lift rates to the highest level in over three decades. The reaction will depend on the pace and urgency of tightening.

Global currencies show mixed performance

The British pound held steady at a two-and-a-half-month low of 1.3359 dollars. This followed the Bank of England holding rates and pausing bond sales. The euro remained flat at 1.1478 dollars. The Australian dollar gained 0.1% to 0.7117 dollars. The New Zealand dollar lost 0.1% to 0.5724 dollars.

The US dollar index stayed flat at 100.2100. This level follows a pullback from a two-and-a-half-month high on Thursday. Fed funds futures price a 53% probability of a US rate hike next month. This probability rose from 27.2% a week ago. Traders cite growing confidence in the Federal Reserve's independence.

Commodity and crypto assets trade lower

Brent crude futures dropped 1% to 103.76 dollars per barrel. Traders reassessed supply risks after recent military strikes in the region. Bitcoin slid 0.1% to 76,442.97 dollars. Ether fell 0.2% to 2,447.39 dollars. GN markets/fx (en-US) reports these figures as of the start of Asian trading.