The US Federal Reserve's hawkish hike is set to pressure Asian currencies, especially the yen ahead of the Bank of Japan's monetary policy meeting on Friday, according to market strategists surveyed by Bloomberg. Strategists said the yen could weaken toward its 200-day moving average of about 158 per dollar, while bond yields will be dictated by moves in their US peers, and stocks, particularly those sensitive to interest-rate movements, are under pressure. Tim Waterer, chief market analyst at KCM Trade, said nerves are likely to linger across Asian markets given the newfound level of hawkishness from the Fed and the potential for other central banks to follow suit. Aozora Bank's Akira Moroga said the BOJ is expected to follow the Fed's lead and raise rates on Friday but may not adopt a stance as hawkish as the Fed's, which could serve as an immediate catalyst for yen weakness, and the bank maintains its view that the yen will settle around 155 yen by year-end. Fukuoka Financial Group's Tohru Sasaki said the bar has been raised for the Bank of Japan to avoid disappointing the market's hawkish expectations, with the dollar-yen rate potentially falling to around exactly 155 yen if Governor Ueda makes sufficiently hawkish remarks, or strengthening to the mid-158 yen range if the BOJ falls short.
Aozora Bank, Ltd.
Fukuoka Financial Group, Inc.
