The Yen Rollercoaster
|Today will be about waiting for the Federal Reserve decision this evening. Of course, there is no tangible chance of a change in rates, so the focus will be on the shifts in the statement and on their assessment on the outlook for policy. The last meeting saw the uncertainty surrounding the UK’s Brexit vote holding the Fed back. That’s now passed, even if the result was not as expected, so the focus is back on the domestic economy and whilst the latest data showed headline employment rebounding, the longer-term measures of momentum on the US labour market still suggest that activity is slowing.
Overnight, the rollercoaster that is the yen has been the main focus, with the move to 104.00 level on USDJPY seen yesterday reversed overnight as reports filter through with more details of the anticipated fiscal stimulus. It was the initial announcement on this earlier this month, in the wake of the Upper House elections that sparked the initial weakening of the yen. Reports also suggest that this will be approved by the cabinet on 2nd August next week. With this confirmed, this could reduce the chances of further stimulus from the BoJ at the end of this week. Expectations are for a further cut of rates into negative territory, together with a further increase in the monthly expansion of the monetary base, but the BoJ could choose to keep its power dry and give fiscal policy the chance to work.
Before then, UK GDP data is the main focus at 08:30 GMT. The economy is seen expanding 0.5% QoQ. This covers the second quarter and the period during which the economy was supposedly held back by the uncertainty of the Brexit vote at the end of June. With a monetary easing largely priced in, the data would need to be substantially different vs. expectations if it is to have an impact on the currency.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.