The yen is calm on Thursday after sharp losses a day earlier. In the European session, USD/JPY is trading at 148.88, down 0.28%.
Fed Minutes: Next cut will likely be 25 bps
The Federal Reserve released the minutes from the September meeting on Wednesday. That meeting was dramatic as the markets were uncertain right up to the rate announcement whether the Fed would cut by 25 or 50 basis points . The Fed opted for the oversized cut and only one FOMC member dissented. The minutes, however, indicated that there were other members who preferred a more gradual pace of lower rates although they went along with the 50-bps cut.
The September decision came after two consecutive employment reports that were softer than anticipated, which may have swayed some dovish members to vote for a 50-bps cut. The takeaway is that Jerome Powell shouldn’t expect the same degree of support for a 50-bps cut at the November or December meetings. The labor market bounced back in September with a nonfarm payrolls report that blew past the forecast and the markets have priced in a 25-bps cut in November.
US inflation will play a crucial part in the Fed’s rate path and September CPI will be released today. Headline inflation is expected to ease to 2.3%, compared to 2.5% in August, while core CPI is forecast to remain unchanged at 3.2%.
In Japan, the BoJ has dampened expectations for another rate hike and is expected to maintain rates at 0-0.25% at the October 31 meeting. New Prime Minister Shigeru Ishiba has supported a monetary policy but has changed his tune since being elected. Earlier this week, Ishiba said there was no need to raise rates, perhaps trying to avoid any controversial statements ahead of the snap election on October 27.
USD/JPY technical
-
USD/JPY tested resistance at 148.61 earlier. Above, there is resistance at 149.01.
-
147.97 and 147.57 are providing support.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
GBP/USD holds recovery gains above 1.2900 ahead of BoE policy decision
GBP/USD builds its recovery momentum above 1.2900 in European trading on Thursday, moving away from its lowest level since mid-August. Traders adjust their positions ahead of the key BoE and Fed monetary policy announcements.
EUR/USD stays firm near 1.0750 amid US Dollar pullback
EUR/USD holds higher ground near 1.0750 in the European session on Thursday. The pair finds support from a broad US Dollar retreat, as traders unwind their Trunp win-inspired USD longs ahead of all-important Fed policy announcements.
Gold price faces challenges due to decline in safe-haven flows, awaits Fed rate decision
Gold price (XAU/USD) faced challenges as the dollar-denominated precious metals struggled due to a stronger US Dollar (USD) following the victory of former President Donald Trump in the US election.
BoE set for a second interest rate cut this year on Thursday
Market consensus points to further easing by the Bank of England's (BoE) upcoming interest rate decision on Thursday. The BoE has held rates steady at 5.00% in the previous gathering, but shifting investor sentiment now suggests a possible 25-basis-point cut this week.
Trump wins: Tax cuts come with a cost
Donald Trump’s victory will ensure a lower tax environment that should boost sentiment and spending in the near term. However, promised tariffs, immigration controls and higher borrowing costs will increasingly become headwinds through his presidential term.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.