Yen gives up one-week high before Fed’s decisions

The yen fell on Wednesday in Asian trade away from a week high against the dollar, and on track for the first loss in four days amid improving risk appetite in the markets following the launch of initial US-China trade talks in Switzerland.

Later today, the important Federal Reserve’s policy meeting is expected to provide clues on the path ahead for US interest rates.

The Price

The USD/JPY price rose 0.6% today to 143.31, with a session-low at 142.41.

The yen rose 0.9% on Tuesday, the third profit in a row, hitting a week high at 142.35 on active haven demand.

Positive Sentiment

Most Asian stock markets rebounded on Wednesday after China announced new monetary policy decisions while commencing trade talks with Washington.

The People’s Bank of China cut interest rates from 1.5% to 1.4%, while reducing reserve requirements for banks by 50 basis points.

Media outlets reported an upcoming meeting between US Treasury Secretary Scott Bessent and Chinese officials this week in Switzerland.

The Fed

Today, the Federal Reserve will decide on monetary policies, expected to hold interest rates unchanged.

The Fed’s monetary statement and Chair Powell’s subsequent press conference will likely provide clues on the path ahead for policies.

US President Donald Trump continued to pressure Powell to cut interest rates, however he said won’t fire him before the end of term in May 2026.

According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May stood at just 8%.

The odds of such a cut in June stood at a healthier 65%.

Goldman Sachs said in a memo that Fed officials would like more evidence from the labor market and other sectors before deciding to cut interest rates, with the bank expecting three 0.25% rate cuts in July, September, and October.