Dollar grinds higher, yen near 7-month high ahead of Fed, BOJ meetings

Live updates

1. 1d ago

   Yen nears 7-month high ahead of Fed and BOJ meetings

   The Japanese yen is trading near a seven-month high as markets anticipate upcoming meetings from the Federal Reserve and the Bank of Japan. A recovery in the currency is driven by expectations of BOJ tightening and pressure from the U.S. While the dollar remains steady, the yen has recently edged lower due to Middle East tensions. A CFTC report indicates a yen reversal is leading a broader reset in market positioning, raising questions about whether the yen carry trade is beginning to unravel.

   Why it matters

   The yen carry trade involves borrowing the low-interest currency to invest in higher-yielding assets. Shifts in central bank policies in the U.S. and Japan can trigger rapid liquidations of these positions. Market volatility often spikes during the lead-up to these specific policy announcements.

   What is confirmed

   • The yen is trading near a seven-month high.
   • Meetings for the Federal Reserve and the Bank of Japan are upcoming.

   Still unconfirmed

   • Middle East jitters caused the yen to edge lower against the dollar.

   What to watch next

   • Federal Reserve interest rate decision
   • Bank of Japan policy statement
   Sources used for this update (6)

   1. Bloomberg.com — Morgan Stanley Favors Trade With Yen Weakening to 163 per Dollar
   2. WSJ — Bank of Japan Tightening Bets, U.S. Pressure Spark Yen Recovery
   3. South China Morning Post — Is the yen carry trade starting to unravel as Japan’s currency strengthens?
   4. FXStreet — CFTC Report: Yen reversal leads a broader positioning reset
   5. Reuters — Dollar steady, yen near 7-month high ahead of Fed, BOJ meetings
   6. fxstreet.com — Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom
   confidence 80%