Shusuke Yamada: If the Bank of Japan raises interest rates hawkishly, it will support the yen

Shusuke Yamada, a foreign exchange and interest rate strategist at Bank of America Global Research, said that if the Bank of Japan adopts a hawkish stance to raise interest rates at next week's meeting, it will provide support for the yen. The market has currently digested the expectation of interest rate hikes, and pricing shows that the probability of another interest rate hike at the October meeting after this hike is about 0.5. If the market's pricing probability for a rate hike in October rises to 0.6 or above, and the pricing probability for a rate hike at the March meeting of the following year exceeds 0.5, the market will interpret this as a hawkish stance and pay attention to the future policy interest rate path guidance provided by the Bank of Japan at next week's meeting.