The Bank of Japan raised its key rate by 25 basis points to 1.25% on a split vote, citing persistent upside risks to inflation but stopping short of signalling a more aggressive tightening path. After the decision, the yen weakened to 157.11 per dollar, about one yen softer than before the announcement. Analysts said USD/JPY could move back toward 160 in the coming weeks if oil prices stay elevated and the Federal Reserve raises rates again in October.

Fed Governor Christopher Waller is set to speak, and he is expected to underscore that a rate hike remains likely ahead of the September 16 FOMC meeting unless incoming data turn unexpectedly dovish. Markets have shifted to a new baseline that the Fed will raise rates in September, keeping the dollar steady after earlier gains. USD/JPY is expected to stay elevated around 160-162 on the hawkish outlook, while the Bank of Canada is seen holding rates at 2.25% as core inflation remains well anchored.

Turkey’s annual inflation extended its decline to 31.8% in July, staying well above the central bank’s 24% target and the 26% forecast in its latest inflation report. Core inflation rose to 29.9% year on year, indicating underlying price pressures have not eased. The average USD/TRY increase was 1.7% month on month in July and around 17% on an annual basis, far below inflation, reflecting the central bank’s continued exchange-rate policy to support disinflation through costs.

Germany’s Ifo business climate index rose to 86.6 in July, extending its climb to a third consecutive month, with the expectations sub-index jumping 2.6 points to 86.7. The current assessment component edged lower, and the headline level remains below its five-year average. The reading is described as reflecting a short-lived lift from the earlier US-Iran memorandum of understanding, while a renewed surge in energy prices, rising Middle East conflict risks and record-low Rhine water levels are weighing on industrial supply chains and the growth outlook.