- The Japanese Yen (JPY) is rising for a second day
- BoJ rate decision is on Thursday
- The US Dollar (USD) is falling for a second day against major peers
- US ADP showed a weaker pace of job creation
The US dollar Japanese yen (USD/JPY) exchange rate is falling for a second consecutive day. The pair fell -0.41% on Monday, settling at 159.07. On Tuesday at 17:00 UTC, USD/JPY trades -0.08% at 158.94 and traded in a range of 158.72 to 159.50.
The Japanese yen has stabilised over the past two sessions after weakening to a six-month low. However, the bounce appears more like a short-term adjustment or a pause in the sell-off rather than the start of a new trend.
The yen has come under pressure since the start of the Iran conflict, given Japan’s reliance on imported energy, which makes it vulnerable to rising prices.
Attention is now turning to the Bank of Japan’s rate decision next Thursday. The central bank is expected to leave rates unchanged following a recent moderation in inflation, which currently stands at 1.5%, below the 2% target. However, the BoJ is still expected to consider rate hikes later this year.
The U.S. dollar is falling across the board. The U.S. Dollar Index, which measures the currency against a basket of major peers, is falling -0.08% to 99.64, extending losses for a second day.
The U.S. dollar is falling for a second straight day as investors adjust positions ahead of major central bank decisions this week.
The dollar had risen to a 10-month high, supported by higher oil prices and safe-haven demand amid Middle East tensions. However, it has since pulled back, tracking lower Treasury yields after ADP employment data showed a weaker pace of job creation, which is seen as a dovish signal for the Federal Reserve.
The Federal Reserve has begun its two-day policy meeting, with the rate decision due tomorrow. The Fed is widely expected to leave interest rates unchanged at 3.5%–3.75%. Markets will focus on updated inflation and growth forecasts, as well as the dot plot, for further clues on the outlook for rates.
