Dollar yen Temporarily declined to 104.78 due to continuous policy of active relaxation at FOMC,FOMC No overall surprise,With the passage of FOMC, there is a possibility that the market theme will shift from selling dollars to buying yen to avoid risk due to monetary easing.

Foreign exchange rate overview

Dollar and yen continue to fall in the foreign exchange market on Wednesday, 29th.

(1) US dollar selling pressure that disliked the intensifying US-China conflict (Uncertainty about the US economy → dollar selling),

(2) Concern over the spread of new coronavirus infection (risk avoidance yen buying),

(3) US FOMC indicated the aggressive easing policy in the US became a weight stone, and the rate of decline widened to 104.78 (the lowest price in four and a half months since March 13) for the afternoon. Although it rebounded slightly after closing, the return was slow, and at the time of this writing, it has been around 104.98.

At the US FOMC held on July 28-July 29,

(1) defer the target for FF interest rate induction (unanimous),

(2) use all means to support the US economy, maximize employment and promote price stability .For the next few months, we will continue at least at the current pace (for $120 billion of US Treasury bills and mortgage-backed securities each month),

(3) Dollar swap agreement for foreign central banks and extension of FIMA repo facility (until March 31, 2021).

Although the Fed emphasized the continued aggressive easing policy, no surprises were seen overall, and changes to the forward guidance, which is the theme of the market, were carried over to the next September meeting.

In addition, Fed Chairman Powell stressed in a press conference that the US economy is very uncertain and the current economic downturn is serious.

Today’s expected range: 104.50-105.50

Analyzed by: Mr. Naoto Arase,Independent Analyst