Home Forex News Asia FX falls with Fed meeting on tap; USDJPY tests 150 after BOJ hike

Asia FX falls with Fed meeting on tap; USDJPY tests 150 after BOJ hike


Asia FX falls with Fed meeting on tap; USDJPY tests 150 after BOJ hike By Investing.com

Breaking News


AuthorAmbar WarrickCurrencies

Published Mar 19, 2024 12:45AM ET

© Reuters.

Investing.com– Most Asian currencies fell on Tuesday as traders remained on edge before a Federal Reserve meeting this week, while the Japanese yen (USDJPY) weakened sharply after a historic rate hike by the Bank of Japan.

The dollar firmed in Asian trade, seeing more inflows as uncertainty before the Fed and somewhat dovish signals from the BOJ kept markets biased largely towards the greenback.

BOJ hikes rates, but USDJPY surges on accommodative outlook 

The yen weakened sharply after the BOJ’s first rate hike in 17 years, with the USDJPY pair surging as far as 150. 

The BOJ raised interest rates by 0.1%, bringing them to neutral territory after nearly a decade of negative rates. The bank also signaled an end to its yield curve control and asset purchase policies.

But the central bank also said that uncertainty over the Japanese economy will keep monetary conditions largely accommodative for the “time being.” Its rate hike on Tuesday, while historic, also marks only a marginal move away from its ultra-dovish stance.

This notion dented the yen, as the main point of pressure on the Japanese currency- high U.S. interest rates- remained unchanged. 

AUDUSD sinks on less hawkish RBA 

The Australian dollar also retreated on Tuesday, with the AUDUSD pair falling 0.4% after the Reserve Bank of Australia kept interest rates steady, but struck a less hawkish tone than markets were expecting.

The RBA did not offer an explicit warning that interest rates could rise higher to combat sticky inflation, and instead offered largely vague cues on monetary policy remaining tight to offset high price pressures. 

Dollar near two-week high before Fed meeting

The dollar index and dollar index futures rose about 0.2% in Asian trade, hitting a near two-week high in anticipation of a Fed decision on Wednesday. 

While the central bank is widely expected to keep interest rates steady, traders were on guard over a more hawkish than feared stance, especially following hotter-than-expected inflation readings for the past two months. 

Fears of the Fed kept most other Asian currencies trading weaker on Tuesday. The rate-sensitive South Korean won’s USDKRW pair rose 0.1%, as did the Singapore dollar’s USDSGD pair. 

The Indian rupee was flat, but the USDINR pair was seen creeping closer to the 83 level, which puts the rupee in sight of record lows. 

The Chinese yuan’s onshore USDCNY pair traded sideways, but remained in sight of the 7.2 level following middling readings on the Chinese economy. The offshore yuan’s USDCNH pair traded well above the 7.2 level, indicating negative sentiment towards the Chinese currency. 

Asia FX falls with Fed meeting on tap; USDJPY tests 150 after BOJ hike

Related Articles

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News