BOJ policymaker Junko Nakagawa stated that policy decisions will be made at each meeting based on hard data. This includes data from the BOJ Tankan survey, which is essential for assessing sentiment and capital expenditure.<\/p>\n
Nakagawa indicated that the risk of falling behind on policy adjustments is low at present. He asserted that long-term interest rates should be set freely by market forces.<\/p>\n
He also noted that uncertainty around trade policies has eased slightly since April.<\/p>\n
These remarks reinforce our view that the Bank of Japan is in no hurry to aggressively raise interest rates. This cautious, data-dependent stance keeps the yen carry trade attractive, where traders borrow yen cheaply to fund investments in higher-yielding currencies. The USD\/JPY exchange rate holding firm above the 155 level this week is a direct reflection of this policy divergence.<\/p>\n
The specific mention of the Tankan survey sets up the early October release as the next major catalyst for Japanese markets. Until then, we can expect low implied volatility in yen currency pairs, which creates opportunities for selling short-dated options. We saw a similar dynamic play out after the July 2025 Tankan survey disappointed expectations and pushed back rate hike odds.<\/p>\n
The idea that long-term rates should be set by the market suggests the BOJ will continue to tolerate a steeper yield curve. We have already seen the 10-year Japanese government bond yield climb to 1.15%, a significant move from the sub-1% levels seen earlier in 2025. This trend supports positions in derivatives that profit from rising long-term interest rates.<\/p>\n
This patient approach is supported by the latest inflation figures, which showed Japan\u2019s core CPI for July 2025 cooled to 1.9%, down from the 2.5% peaks we witnessed in the first quarter of the year. With inflation now back below the 2% target, the central bank has little incentive to act preemptively. This contrasts with the US, where inflation remains stickier, further supporting a strong dollar against the yen.<\/p>\n
While the fundamental direction seems clear, we must be mindful of intervention risk from the Ministry of Finance. Looking back at the sharp market moves during the interventions of 2022 and 2024, any rapid ascent of USD\/JPY toward the 160 mark could trigger abrupt yen-buying operations. Traders should use options to define their risk against such sudden policy-driven reversals.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" BOJ\u2019s Nakagawa emphasizes data-driven decisions, cites Tankan survey, market-set interest rates, and easing trade uncertainty.<\/p>\n","protected":false},"author":62,"featured_media":17043,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-29760","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/29760","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=29760"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/29760\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17043"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=29760"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=29760"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=29760"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}