The US dollar will continue to rise against the Japanese yen after the Fed cut its interest rate in September, which could well be the last monetary policy easing in the United States if its economy remains strong, said Sean Osborne, Scotiabank's currency strategist.
"The USD/JPY pair is going to test 109," the analyst said after the Fed's decision, but before the Bank of Japan issued a verdict on monetary policy.
"The rebound in stocks and the restoration of US Treasury bond yields after the Fed's decision has pulled down the yen," S. Osborne said.
"Wider market/geopolitical events are likely to strengthen the yen in the short term. Nevertheless, the dollar will try its best to take full advantage of the "hawkish" Fed rate cuts, so the growth of USD/JPY can only slow down in the range of 109-110, "he added.
Following the announcement of the Fed's monetary policy verdict, USD/JPY hit a session high of 108.48, the highest level since August 1. The yen went up by 0.5%, to $107.92 - a high since August 23 - after the decision of the Bank of Japan to maintain the status quo on Thursday. The regulator left the target yield of 10-year government bonds at around zero, the interest rate on deposits of commercial banks in the central bank - at -0.1%.
