- USD/JPY nudges higher on Wednesday and reaches the 159.75 area.
- The US Dollar remains buoyant on cautious markets ahead of the Fed’s interest rate decision.
- Japanese Finance Minister Katayama threatened “decisive action” against speculative market moves.
The US Dollar (USD) nudges higher for the second consecutive day against the Japanese Yen (JPY) on Wednesday, trading at 159.75 at the time of writing, with the key 160.00 level, considered a line in the sand for Tokyo intervention, coming closer.
The US Dollar keeps a moderate bullish trend against its main peers as investors brace for the outcome of the US Federal Reserve’s two-day monetary policy meeting, due later today. The bank will, all but certainly, leave its benchmark interest rates unchanged in the 3.50%-3.75% range, with no monetary policy changes foreseen by the market until well into 2027.
Wednesday’s is highly likely to be the latest meeting with Jerome Powell as chairman, as his term ends on May 15, and former Governor Kevin Warsh has been nominated as his replacement. It is still to be seen, however, whether Powell remains on the Board of Governors or, as US President Donald Trump demanded, leaves the central bank.
In Japan, the Bank of Japan (BoJ) stood pat on rates, as expected, on Tuesday, but Governor Kazuo Ueda reaffirmed their commitment to gradual monetary tightening. The positive impact on the Yen, however, was muted, as the comparatively low BoJ interest rates leave the Yen as the currency of choice for carry trade, consisting of borrowing low-yielding Yen to purchase higher-yielding currencies.
Japanese Finance Minister Satsuki Katayama warned Yen sellers before the BoJ decision on Tuesday, flagging a coordinated intervention with the US. Katayama said that Crude Oil volatility is spilling over the FX markets and affecting the broader economy, and assured that Japanese Authorities are ready to take decisive action against speculative activity.
