Yen weakens as Bank of Japan keeps interest rate unchanged
The Bank of Japan recently met and kept its key interest rate unchanged at 0.5%, a decision that caused the Japanese yen to fall to its lowest level in eight months against the US dollar, declining 0.8% to 153.40 per dollar.
This decision was in line with market expectations, but it also revealed the central bank's caution and its commitment to a gradual pace of monetary policy normalization.
Bank of Japan's decision amid inflation data
The Bank of Japan decided to keep interest rates steady as the latest data showed Japan's core inflation rate at 2.9% in September, remaining above the bank's target of 2%.
The Bank of Japan continues to uphold its pledge to raise borrowing costs if the economy performs as expected, but all eyes are now on Governor Oda's press conference, which may provide further clarification on the future direction of monetary policy.
Global Scene: The US Federal Reserve and the US-China Meeting
The Federal Reserve's Decision and Its Impact on the Dollar
The US Federal Reserve cut interest rates by a quarter of a percentage point (25 basis points) to 4.25%.
While this decision was expected, subsequent remarks by Federal Reserve Chairman Jerome Powell showed a significant rebound in the US dollar.
Powell indicated that the divergence in central bank policy and the lack of data due to the federal government shutdown might make another rate cut this year more difficult.
Market expectations for another Fed cut in December fell to around 68%, after being almost fully priced in before the decision.
The Trump-Xi Meeting
On the other hand, currencies and bonds were largely calm as details emerged of the Trump-Xi meeting in South Korea.
In recent days, Trump has repeatedly praised the possibility of reaching an agreement with Xi to ease tensions.
While most investors viewed the outcome positively, many remained cautious about the duration of the thaw in strained trade relations.
Trump has stated that he agreed to reduce tariffs on China in exchange for Beijing resuming its purchases of American soybeans, maintaining the flow of rare earth exports, and cracking down on the illegal trade in fentanyl, but the details were vague, and China has not yet commented.
