The yen rose in Asian trade on Wednesday away from a one-week low against the US dollar, as investors shun new bullish positions on the dollar before the Federal Reserve’s policy decisions later today.
Following a cautious meeting by the Bank of Japan this week, the odds of a Japanese rate hike in July tanked with traders awaiting more data to gather additional clues.
The Price
The USD/JPY price fell 0.15% today to 145.04, with a week high at 145.44.
The yen lost 0.4% on Tuesday against the dollar, marking the third loss in a row amid mounting geopolitical tensions in the Middle East.
US Dollar
The dollar index fell over 0.15% on Wednesday away from a one-week high against a basket of major rivals.
It fell on profit-taking while investors shun new positions before the Fed’s policy decisions later today.
The Fed is widely expected to maintain rates unchanged at 4.5% for the fourth straight meeting, and will likely provide clues on the future path of monetary policies this year.
Japanese Rates
As expected, the Bank of Japan voted to hold interest rates unchanged at 0.5% at this week’s meeting, already the highest since 200.
The vote to maintain rates was unanimous by all nine members of the Bank of Japan’s governing board.
The BOJ didn’t enact any changes to its gradual reduction of government purchases, amounting to a 400 billion yen cut every quarter until March 2026.
Starting April 2026, the BOJ will cut its bond purchases by 200 billion yen a quarter, with an aim at reducing the bank’s government bond holdings by 16-17% by March 2027 compared to June 2024.
The BOJ asserted it’ll keep raising interest rates if inflation and economic outlook holds steady.
The bank warned against ongoing economic risks, especially the impact of global tariffs on the economy and inflation, with the bank standing ready to intervene in case long-term interest rates rose too quickly.
The current odds of a 0.25% BOJ interest rate hike in July fell to below 25%.
Now traders await fresh Japanese data on inflation, wages, and unemployment to gather more clues.
