Yen traders are open to early tightening of monetary policy by the Central Bank of Japan

USD/JPY is showing a downside bias ahead of the Central Bank's policy meeting in late January, with traders open to the Central Bank tightening monetary policy ahead of schedule. While Central Bank Governor Kazuo Ueda said last month that economic data may not support a quick end to negative Intrerest Rates, implied Volatility in the yen associated with the Central Bank meeting remains elevated. FX traders are also focusing on the recent mainstream view around the prospect of Fed rate cuts. Japan continues to be closed on Tuesday and Wednesday, and foreign exchange trading is likely to be light at the start of the week.