The yen’s movements are drawing attention ahead of next week’s FOMC meeting and Bank of Japan meeting. The market anticipates a weaker-yen scenario depending on the Federal Reserve’s policy stance, and a stronger-yen scenario if the Bank of Japan delivers additional rate hikes.
The yen recently weakened to around ¥160 before showing signs of settling in the ¥156 range. Next week, the US FOMC meeting and the Bank of Japan meeting are scheduled one after the other, and the monetary policy announcements from both countries are likely to have a significant impact on foreign exchange rates.
The article presents 2 outlooks. In the first, the Federal Reserve maintains its hawkish tone, sending the yen lower, with dollar-yen potentially moving into the ¥158–¥160 range. In the second, the Bank of Japan delivers additional rate hikes or accelerates the pace of hikes, pushing the yen higher toward levels below ¥155.
The current view is that exchange rates could move sharply again depending on the remarks from the FOMC and the Bank of Japan. Market participants are watching developments next week closely.