JPY stalls, investors await Fed news

The US Dollar maintains its upside trend from early December lows intact, with the USDJPY trading sideways on Wednesday, as the pair’s reversal from the mid-range of the 154.00s is contained at 153.20, awaiting the Fed’s decision

The US central bank is widely expected to cut rates by 25 basis points, but the ensuing monetary policy statement, and, above all, the economic and interest rate projections are likely to show a hawkish tilt.

Macroeconomic figures released this week reveal strong economic activity and buoyant consumption levels. These figures are consistent with higher inflationary pressures and will likely prompt policymakers to scale down the monetary easing projections for next year.

On the other hand, the Bank of Japan seems less concerned about the impact of a strong Yen on the country’s inflation.

Some BoJ board members suggested last week that there is no harm in waiting for next January to hike rates further. This has been weighing on the Yen, which depreciated nearly 3% in a six-day sell-off before Tuesday.

(Source: OANDA)