USDJPY awaits BoJ policy signal
The yen inches towards an 11-month low as traders ponder the timing of the BoJ’s big unwind. As inflation has been above the central bank’s 2% target for over a year, a buildup in hawkish comments by officials lately suggests that the bank might unwind its ultra-loose policy soon. Market participants are closely monitoring the BoJ’s every move, as it is the only dovish central bank among the major central banks. Any change could cause volatility, since the market has been looking for signs of fundamental change. If the BoJ meeting results in a hawkish message, then the US dollar may fall below 143.50. Otherwise, the pair would continue past last October’s ceiling at 150.00.
GBPUSD falls as UK economy weakens
The pound hits a three-month low as the UK’s economy shows cracks amid high borrowing costs. The economy is cooling as the unemployment rate has risen and the GDP contracted in July. However, steady pay growth could be policymakers’ headache and likely to sustain a hint of hawkishness. Markets expect another round of rate increases to curb the highest inflation pressures among major economies. The market will be moved by what happens next. If BoE Governor Bailey confirms this…