Japanese Yen gains against the US Dollar at the start of Fed-BoJ policy week

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The Japanese Yen (JPY) trades firmly against its major currency pairs, except the antipodeans, during the European trading session on Monday. The USD/JPY pair is down 0.26% to near 159.30 at the start of the busy central banks’ week.

The Japanese Yen trades higher against its major currency peers at the start of the week.
Investors expect both the Fed and the BoJ to leave interest rates unchanged.
Japan announces that it has started releasing oil from its strategic holdings to fulfil energy needs.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.21%	-0.19%	-0.25%	-0.12%	-0.48%	-0.72%	-0.19%
EUR	0.21%		0.11%	-0.05%	0.10%	-0.26%	-0.38%	0.03%
GBP	0.19%	-0.11%		-0.08%	-0.01%	-0.37%	-0.52%	-0.04%
JPY	0.25%	0.05%	0.08%		0.16%	-0.21%	-0.28%	0.07%
CAD	0.12%	-0.10%	0.00%	-0.16%		-0.36%	-0.50%	-0.03%
AUD	0.48%	0.26%	0.37%	0.21%	0.36%		-0.15%	0.40%
NZD	0.72%	0.38%	0.52%	0.28%	0.50%	0.15%		0.47%
CHF	0.19%	-0.03%	0.04%	-0.07%	0.03%	-0.40%	-0.47%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

The Federal Reserve (Fed) and Bank of Japan (BoJ) are scheduled to announce their monetary policies on Wednesday and Thursday, respectively.

Investors expect the Fed to hold interest rates steady in the current range of 3.50%-3.75% as inflation expectations in the United States (US) have de-anchored amid surging oil prices due to the closure of the Strait of Hormuz.

According to the CME FedWatch tool, the Fed is unlikely to cut interest rates anytime before the October policy meeting.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.22% lower to near 100.30. Still, the DXY is close to its over nine-month high of 100.54 posted on Friday.

Also, the BoJ is expected to hold interest rates steady at 0.75% and keep the door open for further policy tightening. Investors will pay close attention to BoJ Governor Kazuo Ueda’s press conference to get cues about how much rising oil prices could prompt inflation and weigh on economic growth.

Higher oil price is an unfavorable situation for the Japanese Yen, given that the Asian economy relies heavily on oil imports to fulfill its energy needs.

Earlier in the day, Japan announced that it had started lowering its oil reserves to meet its energy needs amid escalating supply concerns in the wake of the war in the Middle East, which involves the US, Israel, and Iran.

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).