BOJ: Getting Closer To BoJ Announcement Window, No Change Expected
We are approaching 11am onshore Tokyo time, which is getting us closer to the BoJ announcement time window. The table below details the release times for the BoJ meeting outcomes going back to the start of last year. The general rule of thumb is that the later the release time the greater the likelihood of a potential policy shift. Expectations for today are very low for any shift, with market pricing also close to flat in terms of hike risks. This is likely to leave focus on the BoJ tone/language, and then Governor Ueda's press conference later this afternoon (3:30pm local time).
- Below are some snippets from our BoJ preview (see the full preview here).
- The Bank of Japan is expected to keep policy unchanged in September, with future decisions hinging on October’s Tankan survey and branch managers’ meeting, which will clarify corporate sentiment and investment trends.
- External risks, particularly the impact of U.S. tariffs and potential weakness in U.S. labour markets, are now the central concern, limiting the urgency for near-term rate hikes despite inflation hovering near 3%.
- Political uncertainty following Prime Minister Ishiba’s resignation complicates the outlook, with leading candidates and opposition parties generally favouring fiscal stimulus and accommodative monetary policy.
- Analysts are split: some see the BoJ at risk of falling behind the curve, while others argue the next meaningful opportunity for a hike could be as late as 2026, depending heavily on wage momentum and inflation sustainability.
- Governor Ueda’s cautious communication style is expected to reinforce market perceptions of dovishness, emphasising flexibility and conditionality rather than committing to a specific tightening timeline.
Table 1: BoJ Policy Announcement Times
| Local Time | BST | AEST | US EST | |
| Jan 23 (2024) | 12:09PM | 03:09AM | 2:09PM | 10:09PM |
| Mar 19 | 12:36PM | 03:36AM | 2:36PM | 11:36PM |
| Apr 26 | 12:22PM | 04:22AM | 1:22PM | 11:22PM |
| Jun 14 | 12:23PM | 04:23AM | 1:23PM | 11:23PM |
| Jul 31 | 12:56PM | 04:56AM | 1:56PM | 11:56PM |
| Sep 20 | 11:52AM | 03:52AM | 12:52PM | 10:52PM |
| Oct 31 | 11:48AM | 02:48AM | 1:48PM | 10:48PM |
| Dec-19 | 11:52AM | 02:52AM | 1:52PM | 9:52PM |
| Jan 24 (2025) | 12:23PM | 03:23AM | 2:23PM | 10:23PM |
| Mar 19 | 11:25AM | 02:25AM | 1:25PM | 10:25PM |
| May 1 | 12:02PM | 04:02AM | 1:02PM | 11:02PM |
| Jun 17 | 12:31PM | 04:31AM | 1:31PM | 11:31PM |
| Jul-31 | 11:57AM | 03:57AM | 12:57PM | 10:57PM |
Source: Bloomberg Finance L.P./MNI
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USD: BBDXY - Potentially Putting In A Third Higher Low Approaching Jackson Hole
The BBDXY range overnight was 1203.70 - 1207.34, Asia is currently trading around 1208. The USD continues to see profit-taking as the market pares back some risk as we head into Jackson Hole at the end of the week. Depending on the contents of Powell's speech this could change very quickly but the BBDXY looks to be putting in a third higher low which would be a worrying sign to the bears that we could be putting in a short-term base. A sustained break below 1197/1195 is needed to regain the momentum lower and retest the year's lows, but risk is more likely skewed to the USD shorts continuing to be reduced into Powell's speech.
- “As the market readies for Powell’s speech at Jackson Hole, we’ll argue that the biggest risk for Treasuries is if the Fed Chief chooses to throw cold water on the widely anticipated September rate cut,” Ian Lyngen, head of US rates strategy at BMO Capital Markets, said in a note” - BBG.
- Holger Zschaepitz on X: “S&P Global Ratings said revenues from Donald Trump’s tariffs will help soften the blow to the US’s fiscal health from president’s tax cuts, enabling it to maintain its current credit grade. While Trump’s trade war has roiled markets, S&P affirmed its AA+ rating for the US – a score it’s given since 2011, when it first downgraded the world’s largest econ from AAA.”
- (Bloomberg) - “Global investors reduced hedges against a weaker dollar to roughly the same levels seen before April’s tariff shock, State Street said. That shows the shift in insurance against foreign-exchange losses has turned out to be less of a challenge to the greenback than feared.”
- There is a broad consensus that the USD is set to embark on a decent move lower as the world reduces its exposure to the US and repatriates a lot of these flows. This consensus will also result in some decent short squeezes as a lot of the market is positioned the same way.
- Data/Events : MBA Mortgage Applications, FOMC Meeting Minutes
Fig 1: BBDXY Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
STIR: RBNZ-Dated OIS Slightly Firmer Ahead Of RBNZ Decision
RBNZ-dated OIS pricing is slightly firmer across meetings ahead of tomorrow’s RBNZ Policy Decision.
- 22bps of easing is priced for today’s meeting, with a cumulative 37bps by November 2025.
- Notably, pricing is 6-11bps softer across meetings versus late July’s pre-CPI levels.
Figure 1: RBNZ Dated OIS Current vs. Prior (%)
Source: Bloomberg Finance LP / MNI
FOREX: AUD Crosses - AUD Underperforms As Risk Tops Out
US equities saw some profit-taking heading into Jackson Hole led by big Tech, this saw risk sensitive currencies like the AUD trade heavy. This morning US futures trade a little lower, ESU5 -0.20%, NQU5 -0.35%. The AUD has come back under pressure in the crosses as risk looks to be stalling and potentially correcting lower. Some big levels approaching in the crosses but not sure we break these before the event risk at Jackson Hole is dealt with.
- EUR/AUD - Overnight range 1.7972 - 1.8061, Asia is currently trading around 1.8045. With US stocks turning lower overnight potentially signaling a pause in its recent runup, this pair has started to regain upward momentum. It is currently probing the top end of its 1.7650/1.8100 range, which has seen decent supply cap it the last few months, a sustained break above 1.8100 could see the move extend higher.
- GBP/AUD - Overnight range 2.0814 - 2.0909, Asia is trading around 2.0900. The pair found solid demand around the 2.0800 area and extended higher overnight as risk turned lower. Having broken above the pivot within its 2.0400 - 2.1050 range, dips should be supported now enroute to testing 2.10/11.
- AUD/JPY - Overnight range 95.13 - 95.96, Asia is trading around 95.20. The pair broke through 95.50 overnight and has put in another lower high. Although the price is still in the 94.00-97.50 range the multiple failures towards 97.00 looks like a rounded top and with risk looking vulnerable a test of the lower end of the range looks possible. A sustained break below the 94.00/94.50 area could potentially see momentum lower pick up. Not sure we see this until the Jackson Hole event risk is out the way.
- AUD/NZD - Overnight range 1.0939 - 1.0960, the cross is dealing in Asia around 1.0950. The Cross is trying to push higher but continues to stall back towards 1.1000 and will need a sustained break here to potentially extend. Until then the range looks to be 1.0850-1.1000.
Fig 1: AUD/JPY spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
