Ella 
Currently, the probability of a rate hike by the Bank of Japan at its December 19 meeting is 21%. This will have a huge impact on the Japanese yen exchange rate that day.
Yesterday’s sharp rise in the yen against the dollar and pound was just a scaled-down version of the volatility that could arise from the prospect of such a measure.
Yesterday, Bank of Japan policymakers may have hinted that they may adjust their ultra-low interest rate policy. But is the market getting a little ahead of its time and focusing too much on its own crystal ball?
Bank of Japan Governor Kazuo Ueda said policy management will become “more challenging” from the end of this year to next year. Bank of Japan Governor Kazuo Ueda’s mention of “end of the year” sparked market speculation that the central bank may abandon its negative interest rate policy at its next policy meeting.
Here’s the thing: Ever since Ueda Kazuo became governor of the Bank of Japan, the Bank of Japan has been gesturing to the market about what’s possible. Therefore, shorting the yen remains a possibility as the Bank of Japan’s next interest rate decision may disappoint again.
