FX Daily: Bank of Japan plays catch-up with the Fed
USD: Oil in driver’s seat Moderating oil prices have taken the edge off the dollar’s post-FOMC momentum. Energy markets may be gaining some optimism that Tuesday’s reported meeting between US President Donald Trump and the Gulf States during the UN General Assembly could yield some clarity about plans for the region. Media speculation also points ...
The Bank of Japan recently increased its key interest rate by 25 basis points to 1.25%, despite a split vote among its members. This move comes after persistent inflation remained above the central bank's target throughout 2025. While the Bank of Japan expects inflation to stay above target in the coming years, some dissenting board members, appointed by Prime Minister Sanae Takaichi, argued that a rate hike at this meeting was unnecessary due to recent easing in inflation, possibly caused by subsidy-related distortions.
As a result, the Japanese yen weakened against the US dollar to 157.11, slightly above its pre-decision level, as the central bank's statement provided little additional hawkish guidance to support bullish JPY positions.
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