USD/JPY Below Y105 as Fed Sees Zero Rates Out to 2023

The Fed rate decision passed by largely alongside expectations, with the Fed keeping policy largely unchanged and shedding a little more light on the forward guidance unveiled at August's Jackson Hole policy symposium. In the Summary of Economic Projections, only one official saw rate liftoff in 2022, with four members seeing liftoff in 2023.

Fed's Powell remained slightly cagey on their new average inflation targeting regime, giving markets little leverage on just what "moderate" means in their new guidance. Powell disclosed that, to his mind, moderate means "not very high about 2%".

The USD strengthened marginally, moving alongside US Treasury yields, which moved to new weekly highs as equities also slipped.

JPY outperformed throughout the session, pressuring both USD/JPY and EUR/JPY to multi-week lows, with EUR/JPY in particular suffering. Focus turns to the Thursday BoJ decision for any signs of a reversal.

Australian jobs numbers for August, US weekly jobless claims, housing starts & building permits are the data highlights Thursday.

Central bank activity also picks up, with rate decisions due from the central banks of Indonesia, Japan, South Africa and the UK.