Forex traders take their time to digest the news from central banks and their decision about their monetary policies. Both the Bank of Japan and the US Federal Reserve takes the spotlight in the forex market.
The US dollar fell following the announcement of the US Federal Reserve this Thursday. The Fed decided to cut its interest rates for the third time this 2019.
The US Federal Reserve slashed its monetary policy rate by 25 basis points to reach its target of 1.50% to 1.75%. In previous comments, the Fed has already dropped a hint about today’s rate cut. Traders believe that the bank’s policy statement before that it will “act as appropriate.”
Central banks and the US federal reserve want to sustain or support their economies amidst damages from the trade war. Experts still believe that there is still more room for further cut rates as long as the trade dispute still exists.
Meanwhile, on the other side of the globe, the Bank of Japan decided to hold on to its current rates. The bank, however, opened the possibility of rate slashes in the future as economic concerns loom over policymakers.
The decision of the Japanese central bank came hours following the US Federal Reserve’s rate cut decision.
How did this Affect Forex Trading?
The US dollar quickly fell after the announcement of the US Federal Reserve. Meanwhile, the Japanese yen soared after the BOJ’s settled to hold on to its monetary policy. Both decisions of the central banks had a different effect on their currencies.
The US dollar index DXY went tumbling down 0.37% or 0.36 points in today’s trading. And the Japanese yen contract went up by 0.54% or 0.000050 points this Thursday’s sessions.
When paired together, the greenback did not stand at the Japanese yen’s strength. The USD JPY exchange rate entered negative territories as it declines by 0.41% 0.44 points. The pair currently trades at ¥108.37, edging lower from its last close of ¥108.83.