Week in review

The USD/JPY opened the week near its weekly low at 153.41. Dollar buying prevailed from early in the week ahead of the FOMC meeting and the BOJ monetary policy meeting later in the week, with the USD/JPY recovering to above 155 on 14 September. The pair initially struggled to make further gains around 155, but quickly moved above 156 after the FOMC meeting on 16 September was perceived as hawkish, including a unanimous 25bp rate hike. The USD/JPY fell back to below 155.50 on 17 September, partly due to lower crude oil prices. Yen buying did not persist ahead of the BOJ meeting, and the USD/JPY rose to below 156.50 after August CPI released on the morning of 18 September came in below market expectations. The BOJ raised its policy rate by 25bp as expected, but the yen was sold after 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 USD/JPY rising to above 157.50 (Figure 1). The dollar strengthened across the board following the FOMC meeting this week. The Australian dollar slightly outperformed other currencies amid growing expectations of a rate hike (Figure 2).

FIGURE 1: USD/JPY

Note: As at 17:00 JST on 18 September.
Source: EBS, Refinitiv, MUFG

FIGURE 2: MAJOR CURRENCIES' RATE OF CHANGE VS USD THIS WEEK

Note: As at 17:00 JST on 18 September.
Source: Bloomberg, MUFG