Dollar strength has paused and oil prices remain lower, while uncertainty persists ahead of the BOJ meeting. With the Bank of England's announcement approaching, the focus is on its future interest-rate stance.
In the Tokyo market, dollar strength has waned, while reports of Saudi Arabia repairing its pipeline have sent crude oil prices lower and increased selling pressure on the dollar. There are also indications that the dollar-buying trend following the previous day's US FOMC meeting is likely to undergo a correction. USD/JPY reached a high around 156.30 today, then fluctuated down to around 155.90 before moving lower again to the mid-155s.
Cross-yen pairs have also moved in the direction of a stronger yen. Ahead of the BOJ policy meeting, the market is pricing in a 0.25% rate hike and focusing on the strength of the Bank of Japan's stance on future rate increases. The direction of foreign exchange markets could shift again depending on the BOJ's policy decisions.
The Bank of England's Monetary Policy Committee (MPC) is due to announce its decision today, with the market consensus pointing to no change. The headline UK CPI rose yesterday, but sterling was sold after services CPI came in below expectations. Pricing for a November rate hike remains high, but concerns about interest rates persist.
As long-term interest rates rise globally, reports have focused on the pace of reductions in the annual QT revision and a halt to sales of long-term government bonds. The announcement is scheduled for around 8:00 p.m. Japan time.
Scheduled economic indicators include the euro area's final HICP reading for August, Canada's PPI and securities trading volume, and US business conditions indices, housing starts, initial jobless claims, and pending home sales.