TD Securities says markets have largely priced in a September BOJ rate hike; the
yen’s near-term direction will depend on how hawkish next week’s forward
guidance is. If guidance omits consideration of October or December hikes, the
yen could be sold down to the 157–160 range and weaken versus high-yield EM
currencies such as the Indonesian rupiah. If BOJ Governor Ueda signals any pace
faster than the current quarterly cadence, FX investors are likely to read it as
hawkish. TD Securities adds that if post-September pricing implies policy rates
reach around 2% by Q2 2027, the yen’s appeal as a funding currency for global
carry trades would progressively diminish.
