Recent developments in monetary policy and economic data have led to significant shifts in the currency markets. The Bank of Japan (BOJ) announced a 15 basis point hike in its overnight interest rate target and unveiled plans to halve its bond purchases. These moves, combined with a notably hawkish press conference from Governor Ueda, have propelled the dollar to nearly JPY150, marking its lowest level in four months. Concurrently, a subdued core inflation reading in Australia has pressured the Aussie dollar, making it the weakest performer among the G10 currencies. Other major currencies remain relatively stable as market focus shifts to the Federal Reserve.
Equity markets are rallying, with U.S. index futures up around 1%. Gold is firm, trading near a five-day high above $2,420. Rising tensions in the Middle East, declining U.S. inventories, and speculation of a Saudi price increase have driven September WTI from below $75 to near $77.

Asia-Pacific Markets
The BOJ's recent policy adjustments included raising its overnight interest rate target by 15 basis points to 25 basis points and updating its macroeconomic forecasts. The growth forecast for the current fiscal year was slightly reduced to 0.6% from 0.8%, while projections for the next two fiscal years remain at 1.0%. The BOJ also plans to reduce its bond purchases by half by Q1 2026, amounting to a reduction of approximately JPY 400 billion per quarter. Initially, the market reaction was uncertain, but Governor Ueda’s unexpectedly hawkish tone during the press conference solidified the dollar's decline, pushing it close to JPY150, its lowest point since mid-March.
Additionally, revised expectations for the Reserve Bank of Australia led to the Australian dollar falling to $0.6480, its lowest level since early May.

European Markets
The preliminary estimate of eurozone inflation remained flat in July, with the year-over-year rate ticking up to 2.6% from 2.5%. The euro briefly dipped below $1.08 for the first time since early July but has since edged up to $1.0830. To signal a more significant recovery, the euro needs to rise above $1.0875.
Sterling held steady slightly above $1.2800 on Monday and hovered around $1.2830 during most of the North American session. The next key level for sterling, representing a 61.8% retracement, is around $1.2780.

American Markets
Anticipation surrounds today's FOMC meeting, where the consensus is that the Federal Reserve will maintain current rates but signal confidence in achieving its inflation targets, potentially paving the way for a rate cut in September. Market participants are also looking ahead to U.S. employment data due on Friday. While the ADP private sector jobs estimate offers limited month-to-month predictive value for nonfarm payroll changes, it tends to align well over the medium term.
In Canada, May GDP figures are scheduled for release today. The U.S. dollar is trading within a narrow range against the Canadian dollar.