• The Japanese Yen edges lower despite the hawkish sentiment surrounding the BoJ policy decision due on Wednesday.
• The Bank of Japan is widely expected to raise interest rates by ten basis points.
• CME FedWatch Tool suggests a 100% probability of at least a 25 basis points Fed rate cut in September.

The Japanese Yen (JPY) extends its losses against the US Dollar (USD) for the second successive day on Tuesday. Traders remain cautious ahead of the Bank of Japan’s (BoJ) policy meeting on Wednesday, which could potentially result in a rate hike. Markets are speculating that the BoJ may increase rates by ten basis points to 0.1% and is widely expected to announce its bond purchase tapering plans.

Japan’s Chief Cabinet Secretary Yoshimasa Hayashi stated on Tuesday that the Bank of Japan and the government will closely coordinate, but the specifics of monetary policy remain the BoJ's prerogative. Hayashi emphasized that the BoJ will work closely with the government to implement appropriate monetary policies aimed at achieving the inflation target.