Japanese Yen gains against US Dollar ahead of BoJ-Fed policy

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Japanese Yen gains against US Dollar ahead of BoJ-Fed policy

The Japanese Yen gains against the US Dollar, but is down against its other peers.
Investors expect both the BoJ and the Fed to hold interest rates steady.
Iran’s readiness to reach a permanent ceasefire with the US has diminished the US Dollar’s appeal.

The Japanese Yen (JPY) trades higher against the US Dollar (USD), with the USD/JPY pair dropping to near 159.15, during the European trading session on Monday. The pair comes under pressure as the US Dollar (USD) turns upside down amid signs of readiness from Iran regarding a permanent ceasefire with the United States (US).

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.23%	-0.16%	-0.16%	-0.40%	-0.54%	-0.55%	-0.14%
EUR	0.23%		0.08%	0.07%	-0.15%	-0.28%	-0.30%	0.09%
GBP	0.16%	-0.08%		-0.02%	-0.26%	-0.39%	-0.41%	0.01%
JPY	0.16%	-0.07%	0.02%		-0.22%	-0.38%	-0.41%	0.06%
CAD	0.40%	0.15%	0.26%	0.22%		-0.14%	-0.17%	0.26%
AUD	0.54%	0.28%	0.39%	0.38%	0.14%		-0.01%	0.40%
NZD	0.55%	0.30%	0.41%	0.41%	0.17%	0.00%		0.41%
CHF	0.14%	-0.09%	-0.01%	-0.06%	-0.26%	-0.40%	-0.41%

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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.25% lower to near 98.25 after erasing strong opening gains.

Earlier in the day, a report from Axios showed that Iran has delivered another proposal regarding negotiations on Tehran’s nuclear ambitions with a precondition to lift the US blockade for the reopening of the Strait of Hormuz.

Over the weekend, US President Donald Trump announced that he had canceled the US envoys’ visit to Islamabad, calling it a waste of time, as the counteroffer by Iran, as received from Pakistan, is not good enough.

The US-Iran permanent truce, along with the Hormuz reopening, would be an unfavorable situation for the US Dollar, as it would anchor inflation expectations and diminish the hopes of interest rate hikes by the Federal Reserve (Fed) in the near term.

For more cues on the US interest rate outlook, investors await the Fed’s monetary policy announcement on Wednesday, in which it is expected to leave borrowing rates unchanged in the range of 3.50%-3.75%.

Though the JPY trades higher against the US Dollar, it is down against its other peers, ahead of the Bank of Japan’s (BoJ) monetary policy announcement on Tuesday. Investors expect the BoJ to hold interest rates steady at 0.75%, as energy price shocks have raised economic concerns.

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).