The Bank of Japan, after clearly signalling last week's interest rate hike, may return to its accustomed fuzzy guidance about central bank policy to maintain flexibility when it eventually begins to consider how much tightening is enough.

The Bank of Japan raised interest rates on Friday to their highest since the 2008 global financial crisis and revised up its inflation forecasts, underscoring its confidence that rising wages will keep inflation stable around its 2% target.

The Bank of Japan has raised short-term interest rates by a quarter point, the highest in 17 years, signalling efforts to normalise monetary policy in response to persistent inflation and increasing wages.

The BOJ fumbled its communication in December, surprising investors, but then telegraphed Friday's increase so unambiguously that the rate hike was 90% priced in.

Global economic policymakers had been braced for an economic firestorm from the new U.S. administration but instead got a surprisingly restrained start from Donald Trump, who remains big on rhetoric but more cautious on action - for now.

Sterling was little changed versus the euro and the dollar and fell sharply against the yen as investors shifted their focus to economic data and central bank policy meetings later this week.

The U.S. dollar edged up versus the euro but dropped against the yen on Monday as concerns about U.S. tariffs returned and investors braced for a raft of central bank policy meetings and economic data later this week.

Shares were mixed in thin Asian trading on Monday after U.S. stocks edged back from their all-time high. Oil prices fell and U.S. futures sank, while Chinese shares shed some of their early gains after a survey of manufacturers showed export orders dropping to a five-month low.

BoJ, Fed, and RBA policies dictate USD/JPY and AUD/USD paths. Global trade and China’s economy amplify forex market volatility.

As "U.S. exceptionalism" faces its sternest test of the year, the equity markets brace for a torrent of earnings reports from companies constituting nearly 40% of the S&P 500’s market capitalization.

LIVE: Markets in India are likely to continue on a cautious note, while engaging in stock and sector specific activity in the face of multiple headwinds and continued FII selling