Yen in Focus as BOJ Decision Looms, Dollar Set for Worst Week in Two Months

The yen dominated currency markets on Friday ahead of a crucial Bank of Japan (BOJ) policy announcement, with expectations of a rate hike driving its value. Meanwhile, the dollar was set for its worst weekly decline in two months.

BOJ Policy Meeting

The BOJ's two-day policy meeting concludes later today, and markets have fully priced in a 25-basis-point interest rate hike. BOJ officials' recent comments have also hinted at such a move.

Yen Performance

Prior to the decision, the yen remained stable at 156.11 per dollar, hovering near a one-week low. The currency had surged last week amid heightened rate hike expectations but has since retreated as traders await further clarity on the BOJ's policy outlook.

Analysts' Expectations

Analysts anticipate a rate hike by the BOJ to prevent the yen from further weakness. Officials are likely to signal additional rate increases in the future.

Other Currency Movements

In the early Asian session, the euro gained 0.07% to 162.66 yen, while sterling rose 0.08% to 192.80 yen.

Dollar's Decline

The dollar was on track for its sharpest weekly fall in two months, losing 1.2% against a basket of currencies. This decline follows the absence of expected tariff announcements by U.S. President Donald Trump.

Fed Independence Concerns

Trump's recent comments demanding that the Federal Reserve cut interest rates have raised concerns about the independence of the central bank.

Weekly Currency Gains

The euro and sterling were poised for weekly gains of 1.4% and 1.5%, respectively, while the Australian and New Zealand dollars were heading for rises of 1.5% and 1.6%.