What’s next? – USDJPY 02.05.18

The dollar was trading 0.03 percent lower vs the Japanese yen at 109.83 as of 09:45 GMT on Wednesday, as market participants looked ahead of a monetary policy statement later today.

The US dollar index, which measures the greenback’s strength against a basket of six major competitors, was 0.12 percent higher at 91.45 by the time of this writing.

The 10-year Treasury bond yield held above a key resistance level at 3 percent. The dollar reached a four-month peak, changing its dynamic for the year from negative to positive.

Investors have opted for a moderate positioning in the first half of the week as the Federal Open Market Committee kicked off a two-day monetary policy meeting.

While no monetary changes are expected this month, market players will closely monitor for any hints on future plans for the economy. The rate decision is scheduled today at 18:00 GMT.

The Federal Reserve rose interest rates in March by 25 basis points, putting it in a range between 1.50 percent and 1.75 percent. Two rate hikes are yet to come.

“The Fed is expected to reaffirm the Committee’s generally positive view of the economy and optimistic expectations for further growth and inflation in the near-term. The statement is, additionally, likely to reiterate the Committee’s intentions to continue to raise rates throughout 2018 at a ‘gradual’ pace,” Stifel Financial Corporation said in a note.

On the data front, ADP nonfarm employment change for April will be out at 12:15 GMT.

The pair is likely to remain near current levels until the monetary meeting is officially over. Following that event, we might see an upward extension if a hawkish rhetoric is used.

FortFS