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Investing.com - The Bank of Japan’s upcoming monetary policy meeting this week is drawing market attention as traders look for signals on how the recent US-Japan trade agreement might influence the central bank’s tightening trajectory.
News reports ahead of the meeting suggest the BoJ might indicate stronger intentions to raise interest rates before the end of 2025, though recent economic data from Japan has shown mixed results, according to UBS.
Market expectations remain subdued for this particular decision, with UBS analysts noting that a "disappointing" outcome lacking fresh signals would likely keep the USD/JPY exchange rate below the 150 level.
Conversely, if the BoJ provides clear indications that the probability of a rate hike before year-end is increasing, this could surprise markets and potentially drive the Japanese yen toward the midpoint of UBS’s 140-150 target range for the third quarter.
The central bank’s decision comes amid the backdrop of the recently announced US-Japan trade deal, which markets are assessing for its potential impact on Japan’s monetary policy direction and economic outlook.
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