A policy decision by the Bank of Japan later this week, along with other significant central bank meetings and a plethora of global economic data releases, will focus traders’ attention as the dollar maintained firm in cautious trade on Monday and held the yen close to 150.

Monday marks the beginning of the BOJ’s two-day monetary policy meeting, which will take place during a week in which the Bank of England and the U.S. Federal Reserve will announce interest rate changes.

An abundance of PMI data, eurozone inflation statistics, and U.S. nonfarm payrolls round out the action-packed week. According to Carol Kong, a currency strategist at the Commonwealth Bank of Australia, “it’s a busy week.”

“The BOJ meeting will be the most interesting one, given the heightened speculation over a policy tweak at this meeting.”

After hitting a one-year low of 150.78 per dollar last week, the yen saw just minor movement, closing at 149.58 per dollar. The BOJ is under further pressure to alter its bond yield control policy due to the recent spike in global interest rates. There is growing speculation that the dovish central bank may raise its current yield cap during this week’s meeting.

“Our base case remains that the BOJ will leave its monetary policy settings unchanged, although we acknowledge that there is a risk that they will announce tweaks to its yield curve control program,” Kong stated.

Currency movements were generally muted in the larger market as traders remained cautious and risk sentiment remained brittle.

After plunging to new 2023 lows this week, the Australian and New Zealand currencies slightly recovered, with the Australian dollar recently up 0.32% at $0.63545.

The kiwi increased to $0.5825, up 0.28%. As Israeli soldiers backed by tanks moved into the enclave with a military assault, Palestinians in northern Gaza reported heavy artillery and airstrikes early on Monday, prompting renewed international demands for civilians to be protected.

“The Middle East’s geopolitical context continues to be a significant market factor,” stated Chris Weston, Pepperstone’s head of research.

The U.S. Rates

The euro dropped 0.02% to $1.0563 against the dollar, while sterling dipped 0.02% to $1.21195. As investors evaluated the implications of the recent robust U.S. economic statistics for the Fed’s rate stance, the dollar index remained stable at 106.57.

According to data released on Friday, families increased their purchases of cars and vacations in September, which helped the United States consumer expenditure continue its upward trend into the following fourth quarter.

Markets are pricing in a roughly 19% likelihood of a raise in December, despite predictions that the Fed would keep interest rates on hold when it makes its policy announcement later this week, according to the CME FedWatch tool.

“While the Fed will certainly not provide forward guidance in the classical sense at the upcoming meeting, it has already provided some helpful information on its interpretation of recent developments: a more balanced view of risks,” said Christian Scherrmann, a U.S. economist with

“The question is how the decision to hold rates will be communicated this time, especially as the Fed is not yet in a position to declare victory on inflation.”