The Yen Reaches its Highest Level in Two Months

The Japanese yen rose on Wednesday, September 16th, as dealers bet that the Fed’s ultra-easy policy would put pressure on the dollar and elect a new prime minister for the country, while the Chinese yuan extended its gains a day after data indicated better prospects for the world’s second largest economy. The US Fed is due to announce its first policy statement since adopting a more tolerant approach to interest later today.

Traders bought the Yen believing that the Reserve Board is likely to promise more stimulus, which leads to the weakening of the US currency and pushes the yields of Treasury bonds down. The central bank is unlikely to move on interest rates, but it is likely that it will make adjustments to bond purchases.

Yoshihide Suga has been elected Japanese prime minister, becoming the country’s first new leader in nearly eight years as he faces a host of challenges, including reviving the economy affected by the Covid-19 crisis.

The yen touched its highest level in two weeks at 105.25 for the dollar, but investors lowered their bet on the dollar’s ​​decline after the US currency weakened for months.

Against other major currencies, the dollar fell or stabilized, declining in recent trading 0.1% against a basket of currencies and slightly lower against the Australian and New Zealand dollars.

During the Asian session, the yen gained 0.2%. The Australian dollar rose by the same rate to $ 0.7317 and the New Zealand dollar rose to $ 0.6727.

The euro settled at 1.1847 and the pound rose to $ 1.2914 thanks to hopes that a British plan to veto the country’s exit from the European Union will not bear fruit.

The Federal Reserve is due to announce its decision by 18:00 GMT, followed by a press conference by Council Chairman Jerome Powell in half an hour.

In foreign trade, the Chinese yuan rose to its highest level in 16 months, at 6.7652 to the dollar, as it extended a strong jump in the wake of strong data on retail sales and industrial production on Tuesday.

The yuan has risen more than 5% over the past four months.