Yen Nurses Losses as BOJ Meets, Dollar Dogged by Rate Outlook

The Japanese yen has been under pressure in recent trading sessions, as market participants await the outcome of the Bank of Japan's (BOJ) policy meeting. The yen's weakness can be attributed to a combination of factors, including the BOJ's monetary policy stance, global risk sentiment, and the US dollar's rate outlook.

The BOJ has maintained an ultra-loose monetary policy to stimulate economic growth and achieve its 2% inflation target. The central bank has implemented quantitative and qualitative easing (QQE) policies, which involve large-scale asset purchases and yield curve control. These policies have kept Japanese interest rates low, making the yen less attractive to investors seeking higher yields.

Global investors' risk appetites and market sentiment have further influenced the yen's performance. The yen is often considered a safe-haven currency, as it tends to appreciate during times of market stress or global uncertainty. However, the recent improvement in risk sentiment and the absence of major geopolitical events have led investors to favor higher-yielding assets, resulting in the yen's weakness.

The US dollar's rate outlook has also contributed to the yen's losses. Market participants have been pricing in the possibility of an aggressive rate cut by the Federal Reserve, which would lower the US dollar's yield advantage over the yen. This expectation has led to a decline in the dollar's value against the yen.