Fed and BOJ Meetings Set Stage for Hawkish Repricing

The upcoming Fed and BOJ meetings will be pivotal in shaping market expectations. The Fed's decision to hike rates is largely priced in, but the updated dot plot and economic projections will provide crucial guidance on the policy outlook.

Meanwhile, the BOJ faces a hawkish repricing of its OIS curve, with markets pricing in almost two hikes by year-end and more than three expected by the middle of next year. The central bank's tone and Governor Ueda's press conference will be closely watched to validate this shift.

Energy prices remain a crucial wildcard in determining USD/JPY's performance. The correlation matrix shows a strong relationship between energy, US Treasury yields, and the dollar, making it essential to monitor crude oil movements and their impact on US yields.