Global Markets Brace for Crucial Central Bank Decisions Amid Currency Fluctuations

The yen surged to its yearly high amid thin trading due to a Japanese holiday. Market participants anticipate the Federal Reserve's interest rate cut, with attention also on the Bank of England and Bank of Japan's impending decisions. Falling Treasury yields are influencing dollar-yen trades.

The yen reached its highest level for the year on Monday during light trading caused by a Japanese holiday, as market gamblers debated the size of the Federal Reserve's upcoming nearly certain rate cut. Trading in Asia remained subdued with Japan, China, and South Korea markets closed for holidays.

The dollar stabilized at 140.86 yen, close to last week's ending and near the 140.285 end-December low reached on Friday. It fell 1.3% against the yen last week. This week's focal point is the Fed's Sept. 17-18 meeting, coupled with policy decisions from the Bank of England and Bank of Japan on Thursday and Friday, respectively.

Treasury yields have decreased ahead of the much-anticipated meeting, with expectations rising that the Fed might enact a half-point rate cut. Benchmark 10-year yields stayed at 3.65%, consistent with Friday's figures, having dropped 30 basis points over two weeks. Two-year yields, more aligned with monetary policy predictions, were at 3.57%, down from about 3.94% two weeks ago.

(With inputs from agencies.)