08 November, 2018
USD/JPY extended its gains on Thursday testing a session high of 113.722 as markets settled after U.S. midterm election results, which came in as expected, leaving investors free to focus on a Federal Reserve’s policy decision later in the global day. The central bank’s Federal Open Market Committee (FOMC) is expected on Thursday to maintain the hawkish language seen in recent policy statements, while keeping interest rates unchanged this time. The Fed has raised rates three times this year as the U.S. economy boomed and inflation started to pick up, and it has signalled a rate rise in December. While the Fed is on track to raise interest rates the Bank of Japan will press on with ultra loose monetary policy because of low growth and inflation. The widening interest rate differential between U.S. and Japanese bonds has made the dollar a more attractive bet than the yen, which is often a funding currency for carry trades. Later this afternoon US Initial Jobless Claims will be revealed, while tonight (19:00 GMT) US Federal Reserve will announce their latest monetary policy decision.