SINGAPORE- The yen was choppy on Wednesday in the wake of the closely watched Bank of Japan (BOJ) decision, where it raised interest rates and unveiled a plan to taper its huge bond-buying program.
The yen rallied as much as 0.8 percent to a more than three-month high of 151.58 per dollar immediately after the BOJ announcement, though reversed those gains shortly after to last stand over 0.3 percent lower at 153.25.
The central bank said in a statement that it raised its short-term interest rate target to 0.25 percent from 0-0.1 percent previously, and that it would taper its bond buying to three trillion yen ($19.53 billion) per month as of the first quarter of 2026.
The yen looked set to end July with a 5 percent gain, helped by Tokyo’s bouts of intervention and the unwinding of short-yen carry trades prior to the BOJ decision.
Down Under, the Australian dollar slid to its weakest since May after core inflation surprised on the downside and greatly lessened the risk of another rate hike.
Wednesday was shaping up to be a busy day as investors will also get inflation figures from France and the wider euro zone bloc later in the day, alongside a policy decision from the US Federal Reserve, which takes center stage.
Spreading geopolitical violence also kept markets on edge.
The Aussie was last 0.54 percent lower at $0.6503, having fallen more than 0.8 percent to a three-month low of $0.64825 in the wake of the consumer price index (CPI) data. That left the currency heading for a monthly loss of more than 2 percent.
Markets have since abandoned bets of a further rate hike from the RBA and are wagering on an easing as early as November. The RBA holds its policy meeting next week.
“If the RBA needed a smoking gun to tip the balance towards hikes next we ainly won’t please the RBA, isn’t sufficient to convince them to hike by 25bp next week,” said Chris Weston, head of research at Pepperstone.
