TD Securities: Rate Hikes Alone Cannot Support the Yen Ahead of BOJ Meeting

A week of major central bank meetings is set to begin, with upcoming decisions from the Bank of Japan and the Reserve Bank of Australia drawing attention after the latest U.S.-Iran ceasefire. According to Jin10, markets broadly see a Bank of Japan rate hike as a done deal, with focus shifting to how the yen will respond while it remains in a zone where intervention risk persists. TD Securities strategists said rate hikes alone are not enough to support the yen. They argued that the Bank of Japan would need to deliver more hawkish policy guidance, accelerate tightening, and raise the terminal rate to effectively curb further yen weakness. Meanwhile, the Reserve Bank of Australia is expected to pause after three consecutive rate hikes. Nomura Securities analysts said the RBA is unlikely to easily declare that it has achieved its inflation target, and they expect the central bank to provide limited forward guidance. Nomura added that any signs of a darker outlook for economic growth could put pressure on the Australian dollar.