USD/JPY Volatility Peaks Amid FOMC Meeting and BOJ Rate Hike
The USD/JPY exchange rate was volatile during Japan's autumn holidays, as it responded to key economic events. The week began near its weekly low at 153.41, but recovered to above 155 on September 14 due to dollar buying ahead of the FOMC meeting and the BOJ monetary policy meeting. After a hawkish FOMC meeting on September 16, which included a unanimous 25bp rate hike, the USD/JPY quickly moved above 156. However, it fell back to below 155.50 on September 17 due to lower crude oil prices.
The yen's buying did not persist ahead of the BOJ meeting, and the USD/JPY rose to below 156.50 after August CPI came in below market expectations on September 18. The BOJ raised its policy rate by 25bp as expected, but two policy board members voted against the decision, sending the yen into a decline and the USD/JPY above 157.50.
Overall, the dollar strengthened across the board following the FOMC meeting, with the Australian dollar slightly outperforming other currencies amid growing expectations of a rate hike.