According to Jinshi Data, analyst Garfield Reynolds pointed out that traders will pay close attention to the Fed's meeting on Wednesday, which is expected to keep the policy rate unchanged. This may cause the market to underestimate the potential of the Bank of Japan's meeting earlier in the day to stir global markets.
Although core inflation has remained at or above the central bank's target since April 2022, Bank of Japan Governor Kazuo Ueda has disappointed since taking office. This lowers the bar for a hawkish surprise. Even keeping rates unchanged could bring surprises if the path of tapering bond purchases and rate hikes is bold enough.
The yen appears poised to surge again if joint action by the Bank of Japan and the Federal Reserve works in its favor. Even after yen shorts have been rapidly reduced from historical extremes, shorts remain vulnerable.