Yen Volatility Peaks as FOMC and BoJ Meetings Send USD/JPY Soaring
The Japanese Yen has been volatile over the autumn holidays, with the USD/JPY pair experiencing significant price swings. The pair opened near its weekly low at 153.41 but quickly moved above 155 on September 14 as dollar buying prevailed ahead of the Federal Open Market Committee (FOMC) meeting and the Bank of Japan (BoJ) monetary policy meeting.
After a perceived hawkish FOMC meeting, including a unanimous 25bp rate hike, the USD/JPY moved above 156. However, it fell back to below 155.50 on September 17 partly due to lower crude oil prices.
The BoJ raised its policy rate by 25bp as expected, but two policy board members voted against the decision, sending the USD/JPY above 157. Governor Kazuo Ueda's press conference initially prompted some yen buying, but the move ultimately reversed and the yen weakened again, with the USD/JPY rising to above 157.50.
The combination of a perceived hawkish FOMC, a BoJ rate hike with dissenting votes, and softer August Consumer Price Index (CPI) data all contributed to renewed Yen weakness against the Dollar.