Dollar Lower Against Yen Ahead of Both Countries’ Central Bank Meetings – WSJ

dollar to naira

The dollar fell against the yen Monday, as investors bet the Federal Reserve will leave rates unchanged at its monetary policy meeting this week, while Japan’s central bank is unlikely to move to stem its currency’s recent strength.

The U.S. currency was recently down 0.4% against the yen at ¥101.90. The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently down 0.3% at 86.91.

Uneven U.S. data have dented expectations for the Fed to raise rates at its Sept. 20-21 meeting, weighing on the dollar. Lower rates make the U.S. currency less attractive to investors seeking yield.

Fed-funds futures, used to bet on central-bank policy, on Friday showed investors and traders assigned a 12% likelihood to a rate increase in September, according to CME data. The chances for an increase at the Fed’s December meeting stood at 55%.

At the same time, some investors believe the Bank of Japan has run out of ammunition in its battle to kick-start the country’s economy by keeping the yen cheap. Japan’s central bank meets on Wednesday.

“Central bank policy is likely to drive currencies this week,” analysts at Standard Bank said in a note to clients. “We expect the Fed to leave policy unchanged, which could weigh on the dollar. The Bank of Japan, on the other hand, seems likely to ease but perhaps not sufficiently to stop the yen from rising.”

The euro was up 0.1% at $1.1173. The dollar was up 0.4% against the Mexican peso at 19.69.