- FED Policy Meeting Report
- 10 Year-Yield Control Expectations
- Japan Economy Concerns
The USD.JPY pair tumbled to two-week lows as the U.S dollar continued to weaken ahead of a crucial policy report by the Federal Reserve. The greenback was down in early European trade sessions, sending the pair down by 0.3% to session lows of 107.29.
The pair has retracted from three-month highs as improving sentiments about global economic recovery post-COVID-19 continued to fuel greenback weakness across the board. The U.S dollar index, which tracks the dollar strength, has tumbled from above the $100 psychological level sending the USD/JPY lower.
A tumble from three-month highs continues to gather pace as the U.S central bank concludes its two-day meeting. While no major changes are expected from the meeting, the steps that the central bank intends to take to revitalize the U.S economy should weigh in on the dollar strength conversely USD/JPY pair.
Some analysts expect the FED to adopt a yield curve to drive the 10-year Treasury yield lower. The yield curve has steepened in recent days as improving economic data continue to fuel a sell-off of U.S bonds.
Expectations of the FED embarking in a yield curve has seen most Japanese investors resort to selling the dollar in favor of the Yen. The result has been a slide in the USD/JPY exchange rate from three-month highs. However, uncertainty about the outcome of the FED meetings should continue to weigh in on the USD/JPY pair.
Weak economic data continues to curtail Yen gains against the dollar on raising concerns about the Japanese economy, struggling amidst the COVID-19 pandemic. The country’s corporate goods price index has slid for a third straight year, clocking the lowest level since 2016. The economy is reeling from the effects of lower commodity prices led by petroleum and coal products. Demand for steel also remains at all-time lows amidst sluggish demand for automobiles around the world.