The Japanese Yen remains weak ahead of the Federal Reserve's decision, while the US Dollar continues to rise. Investors expect a 25 basis point rate cut from the Fed but anticipate a hawkish tone in its statement, potentially impacting future monetary policy.
The Japanese Yen 's recovery attempts are limited ahead of the Fed eral Reserve's decision. Investors anticipate a 25 basis point rate cut accompanied by a hawkishly tilted forward guidance. In contrast, the Bank of Japan is expected to keep rates on hold on Thursday. The US Dollar continues its upward trend from December lows. The USD/JPY pair's reversal from the mid-154.00s has been contained at 153.20, trading sideways on Wednesday pending the Fed 's decision.
The US central bank is widely projected to cut rates by 25 basis points, but the subsequent monetary policy statement, particularly economic and interest rate projections, are likely to indicate a hawkish stance. This week's macroeconomic figures reveal robust economic activity and healthy consumption levels, consistent with higher inflationary pressures and potentially prompting policymakers to reduce monetary easing projections for next year. The Bank of Japan, on the other hand, appears less concerned about the impact of a strong Yen on Japan's inflation. Some board members suggested last week that there's no harm in waiting until next January to raise rates further. This has weighed on the Yen, which depreciated nearly 3% in a six-day sell-off before Tuesday. The table below displays the percentage change of the Japanese Yen (JPY) against major currencies today. Japanese Yen showed the strongest performance against the New Zealand Dollar
JAPANESE YEN US DOLLAR FED INTEREST RATES MONETARY POLICY
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