- 10-year US T-bond yield posts modest losses following Monday’s rally.
- The US Dollar Index clings to small gains above 97.80.
- The pair’s action is likely to remain subdues ahead of FOMC’s policy announcements.
The USD/JPY pair advanced to its highest level since early August at 109.07 on Tuesday but struggled to push higher as investors seem to be moving to the sidelines ahead of this week’s crucial macroeconomic events. As of writing, the USD/JPY pair was down 0.05% on the day at 108.90.
Hopes of the United States (US) and China finalizing phase one of the trade deal at the APEC summit in November and avoiding additional tariffs in December provided a boost to the market sentiment on Monday. The 10-year US Treasury bond yield gained more than 3% and Wall Street’s main indexes closed in the positive territory to make it difficult for the safe-haven JPY to show resilience against the USD.
Eyes on FOMC
Meanwhile, the US Dollar Index, which tracks the USD’s value against a basket of six major currencies, inched higher on Tuesday to help the pair stay afloat near the 109 mark.
Later in the session, Pending Home Sales and Conference Board’s Consumer Confidence Index will be featured in the US economic docket. More importantly, the US Bureau of Economic Analysis will release the first estimate of the third-quarter Gross Domestic Product (GDP) growth and the Federal Open Market Committee will announce the monetary policy decisions on Wednesday.
Previewing the FOMC meeting, “Though it is a close call, we suspect the most likely outcome for next week’s meeting is that the FOMC will cut the fed funds rate another 25 bps, while continuing to emphasize risks to the outlook from global growth and trade policy and acknowledging that inflation remains below target,” said Wells Fargo analysts. “In the event of a cut in October, a fourth rate cut in December would likely not be needed.”
Technical levels to watch for
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