Dollar-Yen Consolidates Around 159 as BOJ and FOMC Minutes Loom

The foreign exchange market is expected to remain stable this week, with limited directional conviction across major currency pairs. The dollar-yen pair is likely to consolidate around the 159 level with a slight downward bias.

The rebound in dollar-yen following the coordinated Japan-US intervention has lost momentum, and market participants project ranges of 158.00-161.00 for the pair. The Bank of Japan's signal of a September rate hike and FOMC minutes from the July 28-29 meeting will be key focuses next week.

The US Consumer Price Index (CPI) released on August 12 showed slowing inflation, which has receded expectations for an early US rate hike. However, renewed caution over the Middle East situation drove a rebound to around 159.56 in dollar-yen. The market still prices in over a 90% probability of one rate hike by year-end.