The Japanese yen has been on a tear in the past week, with USD/JPY falling all the way back below 140.00 now with the low earlier touching 139.31. While a technical correction may be overdue and a softer dollar also contributed to that, one reason that should not be understated is growing speculation that the BOJ might tweak something later this month.
That is being reflected by 10-year JGB yields, as it steadily climbs back to near 0.48% today.
The key threshold for now remains at the 0.50% level and the hope among those expecting a change by the BOJ would be a potential tweak to the threshold to 0.75% perhaps. At the start of the year, there was even talk of the Japanese central bank even perhaps doubling that to 1.00%.
However, just be mindful that bond traders were already burned once in March during Kuroda's last policy meeting in charge. And so far during Ueda's tenure, there hasn't been much progress on pivoting to a more hawkish stance - despite the extremely hot wage numbers that we have seen from the shunto negotiations.
So, are we on course for a repeat of March again? That is a cautionary tale for the yen currency as well, which after that declined heavily in April through to June.
The BOJ will announce their next policy decision on 28 July, so there is still two more weeks to go.