USD/JPY nearest to yearly highs as investors await BoJ, Fed decisions

The USD/JPY pair is trading at 147.71, a yearly high, as investors remain cautious ahead of the US Federal Reserve and Bank of Japan policy decisions. The Fed is expected to keep rates unchanged at the 5.25%-5.50% range, focusing on economic forecasts and Federal Funds Rate projections.

The Bank of Japan is not expected to raise rates but may provide insights into potential changes to its Yield Curve Control (YCC) and negative interest rate policies. The last Summary of Economic Projections (SEP) predicted a 1% economic growth, a 4.1% unemployment rate, and a 3.2% inflation gauge, with the FFR projected to peak at around 5.60%.

The BoJ will reveal its decision on September 22, which is not expected to raise rates. Data shows that August’s US building permits rose above estimates, and housing starts fell the most since 2020, at -11.3%. The Japanese docket will feature the Balance of Trade for August, estimated at ¥-659.1B, and exports are foreseen to shrink by -1.7%.