FALCON POWERS – The Japanese yen held onto its gains on Monday, but sentiment remained fragile after the currency had its best weekly performance since late April on shifting interest rate expectations and a sell-off in equities. Investors are now looking to the policy decisions by the Bank of Japan and the U.S. Federal Reserve on Wednesday for further cues.
Heightened speculation that the BOJ will raise borrowing costs this week has helped boost the yen, and the Fed is widely expected to pave the way for policy easing in September. Investors are also worried about growing geopolitical volatility, as Israel considers responding to a rocket attack on the occupied Golan Heights, which it blamed on the Lebanese Hezbollah group along with the United States.
The dollar was down 0.1% at 153.64 yen in the latest trading, making up some of its previous 0.49% decline to 153 yen. Data on Friday showed investors had sharply cut their bets against the yen, which had traded at a 38-year low earlier this month.
A slew of major U.S. earnings, including from Amazon, Apple, Meta and Microsoft, are scheduled this week.
The dollar index, which measures the currency against the yen, euro and sterling among others, rose 0.13% to 104.51.
The euro fell 0.21% to $1.0832, while the pound dropped 0.41% to $1.2813.
Speculation is growing that the Bank of Japan will raise its interest rate on Wednesday at the same time it dramatically reduces its monthly bond purchases. Meanwhile, the US Federal Open Market Committee is widely expected to keep interest rates unchanged this week, but to cut them by a quarter percentage point at its next meeting in September.
The Australian dollar has stabilized at $0.6545, trying to recover from the low level it reached on Friday at $0.65105, a level not seen since the beginning of May.
The leading cryptocurrency Bitcoin rose 3% to $69,490 after receiving some support from positive comments from former US President and Republican presidential candidate Donald Trump. Trump said on Saturday that the United States must dominate this sector, or China will.
