Dollar Steady, Yen Wobbly as BoJ Policy Decision Looms
London: 18 March 2024 (TraderMade): The US Dollar held its ground on Monday as global financial markets awaited a flurry of central bank meetings this week. All eyes are on the Bank of Japan (BOJ), which is widely expected to end its negative interest rate policy as soon as this week. This decision could significantly impact the Japanese Yen.
The USDJPY pair slightly edged up by 0.02% to 149.1095.
BOJ on the Brink of Policy Shift
Recent wage hikes by major Japanese companies have fueled speculation that the BOJ is preparing to abandon its ultra-loose monetary policy. Governor Kazuo Ueda has hinted that the bank will closely examine wage data when making its policy decision. Internal preparations for an exit from negative rates have reportedly been underway for months.
Yen Feels the Heat
The Yen dipped slightly against the US Dollar on Monday, hovering near a one-week low. However, it remains modestly higher for the month overall. Markets are currently pricing in a 39% chance of the BOJ raising rates on Tuesday.
Beyond Japan: A Week of Central Bank Action
Central banks in Australia, England, Norway, and several other countries are also slated to meet this week. While most are expected to hold rates steady, investor focus will be on their policy statements and any hints about future adjustments.
Dollar Supported by US Inflation Data
The US Dollar remains relatively stable despite expectations of future rate cuts from the Federal Reserve. Hotter-than-anticipated inflation data in the US has led investors to scale back their bets on aggressive easing. The Fed meeting later this week will be closely watched for any changes in its economic projections.
Key Questions Remain
The outcome of the BOJ meeting will be a major event for global markets. Will the bank end negative rates as anticipated? If so, how will it signal its future intentions? Answers to these questions will guide the Japanese Yen and influence other currencies as well.
