Japanese Yen weakens with Fed and BoJ monetary policy meetings in focus

The Japanese Yen weakened as investors focused on upcoming monetary policy meetings by the Federal Reserve and Bank of Japan. By the end of trading on Monday, USD/JPY had reached 157.42, marking the lowest level since September 18. The US Dollar showed signs of strength after a week of underperformance, as uncertainty surrounding AI-related investments drove demand for government bonds and kept US Treasury yields low.

The US Dollar Index, which measures the dollar's value against six major currencies, traded around 101.91, falling to a low of 101.45 last week. Shorter-term Treasury yields edged up, while longer-dated yields remained near recent lows, with the benchmark 10-year yield sitting at 4.98%. The Federal Reserve and Bank of Japan are expected to meet on Wednesday and Friday, respectively, with both central banks likely to keep interest rates steady after recent hikes.

Traders will closely watch the statements and remarks from the Fed Chair Kevin Warsh and BoJ Governor Kazuo Ueda for insights into the timing and pace of further rate hikes. Recent inflation data, including a rise in the US Core PPI, supports the expectation of continued rate hikes from both central banks.