In last week’s article, I pointed out that ” the Fed’s Summary of Economic Projections (SEP) and Chair Powell’s press conference may suggest that the terminal rates could be higher than previously anticipated” and ” If the BOJ maintains an ambiguous stance on rate hike direction, market focus may shift to Japan’s persistently low interest rates. “
The results of the FOMC meeting announced at 4 AM (JST) on December 19 and the BOJ meeting just before noon were exactly as I predicted.
Consequently, USD/JPY climbed from below 155 on the 18th to above 157 on the 19th.
Importantly, while EUR/USD hovered around 1.03 on the 19th—a one-month low—EUR/JPY rose from approximately 160 on the 18th to above 163 on the 19th.
With the euro as a midway benchmark, it becomes even clearer that the dollar is a strong currency and the yen is a weak one.
At the FOMC meeting, the Fed decided to lower the policy rate (the target range for the federal funds rate) by 0.25% to 4.25-4.50%.
This marks three consecutive meetings of rate cuts since September, totaling 1.0%.
However, there were three noteworthy points this time.
