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USD/JPY remains below the 160.50 intervention zone in the Asian session on Wednesday. Despite the BoJ's rate hike to its highest level since 1995, Japan's borrowing costs remain significantly lower than the US, undermining the Japanese Yen. However, thpair US Dollar remains on the back foot amid the optimism over the US-Iran peace deal and ahead of the Fed policy decision, weighing on the pair.
AUD/USD is consolidating above mid-0.7000s in the Asian session on Wednesday as traders await the outcome of a two-day FOMC meeting due later in the day. In the meantime, the optimism over an interim peace deal between the US and Iran keeps the US Dollar bulls on the defensive. This, along with the RBA's hawkish pause on Tuesday, acts as a tailwind for the pair.
Gold is holding its five-day winning streak near $4,350 in Asian trading on Wednesday, but remains within this week’s familiar range. Traders look forward to the all-important US Federal Reserve monetary policy decision for a clear directional impetus.
The most important event will be the Fed meeting on Wednesday, with Mr. Warsh now in charge. As more than one analyst points out, the case for holding rates the same is strengthened by the Iran deal and the prospect of the Strait re-opening, although nobody thinks Warsh can marshal enough doves to do a cut this time.
The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.
