Japanese Yen: Volatility watch over autumn holidays – MUFG

MUFG’s Teppei Ino reviews recent USD/JPY price action, noting the pair opened near 153.41 before US Dollar (USD) buying ahead of the Federal Open Market Committee (FOMC) and Bank of Japan (BoJ) meetings lifted it above 157.50. He highlights how a perceived hawkish FOMC, a BoJ rate hike with dissenting votes, and softer August Consumer Price Index (CPI) data all contributed to renewed Yen weakness against the Dollar.

Dollar strength drives renewed yen weakness

"The USD/JPY opened the week near its weekly low at 153.41. Dollar buying prevailed from early in the week ahead of the FOMC meeting and the BoJ monetary policy meeting later in the week, with the USD/JPY recovering to above 155 on 14 September."

"The pair initially struggled to make further gains around 155, but quickly moved above 156 after the FOMC meeting on 16 September was perceived as hawkish, including a unanimous 25bp rate hike."

"The USD/JPY fell back to below 155.50 on 17 September, partly due to lower crude oil prices."

"The BoJ raised its policy rate by 25bp as expected, but the yen was sold after two policy board members voted against the decision, sending the USD/JPY above 157."

"Governor Kazuo Ueda's press conference initially prompted some yen buying, but the move ultimately reversed and the yen weakened again, with USD/JPY rising to above 157.50."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)