- The Japanese Yen (JPY) is falling after recent gains
- An earthquake of 7.6 hit the northeastern region
- The US Dollar (USD) rises against major peers
- All eyes are on Wednesday’s Fed rate decision
The US dollar Japanese yen (USD/JPY) exchange rate is rising after losses last week. The pair fell -0.53% in the previous week, settling on Friday at 155.35. On Monday at 17.30 UTC, USD/JPY trades 0.37% at 155.93 and traded in a range of 154.90 to 155.99.
The Japanese yen is falling across the board after a powerful earthquake shook Japan’s northwest region.
The earthquake, which measured 7.6 on the Richter scale, prompted tsunami warnings and evacuation orders for residents.
The downside of the yen may be limited ahead of next week’s Bank of Japan interest rate decision, where the market is pricing in an over 81% probability of a rate hike.
The US dollar is rising across the board. The US dollar index, which measures the USD against a basket of currencies, is rising 0.18% to 99.16, after two straight weeks of losses.
The US dollar is edging higher on Monday as investors brace for the long-awaited Federal Reserve interest rate decision on Wednesday.
The market is pricing in an 87% chance that the Federal Reserve will reduce rates by 25 basis points so that investor attention will be on the language of the statement, the latest Fed economic projections, and Federal Reserve chair Jerome Powell’s press conference for further clues on where interest rates could go next.
Given that the Federal Reserve is divided, some policymakers still consider inflation too sticky at 2.8% for another rate cut. Therefore, Federal Reserve chair Jerome Powell could adopt a hawkish stance to appease those members of the committee.
We expect to see some dissents, potentially from both hawkish and dovish members. The FOMC has not had three or more dissents at a meeting since 2019, and it has happened just nine times since 1990.
