BUZZ-Comment — USD/JPY will rise from around 157.00 to approximately 158.00 as the FOMC meeting approaches

Reuters, October 28 - After briefly hovering around 157.00, USD/JPY has returned to trading near 158.00, thanks to market expectations that the Federal Open Market Committee (FOMC) will take a hawkish stance at Wednesday's meeting to keep rates unchanged (nL6N46606V), as well as a rebound in AI-related stocks following Anthropic's IPO announcement (nL6N46D1HW). However, it remains uncertain whether this week's gains can be sustained.

The market still exhibits excessive optimism regarding AI stocks and credit for mega-cap tech companies; a scenario in which AI stocks lead a decline causing Wall Street to fall again could trigger a new round of US dollar sell-offs.

Admittedly, amid the ongoing global geopolitical tensions led by the Middle East, the US dollar retains its status as a safe-haven currency, but the recent fall in crude oil prices has alleviated some concerns nL2N46D00J.

During Wednesday's Asian session, USD/JPY traded in the 157.80-158.03 range on the EBS platform, with renewed market concerns over a possible intervention by Japan in the FX market nL6N46D0XE. In addition, the market widely expects the Bank of Japan to maintain a hawkish stance at Friday's policy committee meeting nL3N46C1XJ, nL3N46C02N.

Indeed, the Japanese government continues to pursue a reflationary policy despite repeated denials, so it is likely to attempt to delay further rate hikes by the Bank of Japan. Economic Minister Yoshinori Akira has stated that he hopes to attend Friday's Bank of Japan meeting, when he will undoubtedly urge the Bank of Japan to remain patient nP8N44Z00Q, nL1N469013.

Before the release of the Federal Open Market Committee (FOMC) statement and any possible decision by the Bank of Japan on Friday, the market is likely to remain on edge. The market’s response to these statements will determine the subsequent trend of the USD/JPY exchange rate.

Related commentary nL2N46C01K, nL1N46901B, nL1N46601I, nL1N45R025.

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