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EsFed, BOJ Decisions in Focus as Oil Lifts Hike Odds
Futures point to a Fed hold next week, with July hike odds near 34% after oil topped $100 on July 23. Bitcoin trades around $64,000 as markets also eye the BOJ decision and a weaker yen.
Markets approach a pair of interest rate decisions with futures leaning to no change from the Federal Reserve next week and from the Bank of Japan two days later. Fed probabilities show about a 34% chance of a July increase after oil prices climbed above $100 a barrel. Bitcoin is near $64,000, and the yen is at multi-decade lows against the dollar.
In Washington, the Fed is expected to leave the target range unchanged on Wednesday, which would be a fifth straight pause. The range has stood at 3.5% to 3.75% since December 2025. CME FedWatch put the odds of a July hike near 38% on July 23, up from about 12% a week earlier, before easing to roughly 34% late in the week. The July meeting includes no new economic projections, so attention is on the policy statement and the chair’s press conference.
Inflation eased in June. U.S. consumer prices fell 0.4% from the prior month, and the annual rate slowed to 3.5% from 4.2%. The July reading is due on August 12.
In Tokyo, the Bank of Japan is expected to keep its policy rate at 1% on July 31. The yen weakened past 163 per dollar last week, the lowest in about four decades. Authorities have highlighted readiness to act in the currency market. Finance Minister Satsuki Katayama stated,
"Our stance has not changed at all. If there is a need for it, we will take decisive action appropriately at any time."
Looking ahead, most economists in a recent poll expect the policy rate to reach 1.25% by December. Of 87 economists surveyed, 86% forecast that level by year-end; among those giving a month, 53% pointed to December and 35% to October. Kazutaka Maeda of Meiji Yasuda Research Institute expects an October increase and noted,
"The pace of rate hikes, which until now has been roughly once every six months, may accelerate somewhat due to the need to counter inflationary and yen-selling pressure."
Currency swings can affect global risk assets, including crypto, through funding flows. Low-cost yen borrowing has long financed purchases of higher-yielding assets abroad. A stronger yen makes those loans costlier to repay and can force investors to trim positions quickly, often starting with the most liquid holdings. Bitcoin trades around the clock and can reflect selling before equity markets open. Crypto trader Crypto Rover warned, “Any hint of aggressive rate hikes or intervention from the BOJ could pump the yen, causing a massive carry trade unwind. Remember August 2024? The next unwind could be even more brutal.” Traders will watch the BOJ’s Outlook Report and any guidance from Governor Kazuo Ueda on the currency.
