Risk Spikes for Vulnerable Yen as Fed Meets During Japan Holiday
- Widening U.S.-Japan policy divergence spurs volatility surge
- Japan traders on holiday will miss Fed’s move next week
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Japan’s FX traders are going on vacation at a key moment for financial markets and the possibility that their absence will exacerbate yen swings has caused its expected volatility to surge to a two-year high.
The Golden Week holidays starting Friday and covering much of next week means that vacationing investors will miss what’s likely to be one of the Federal Reserve’s biggest policy tightening steps in recent decades. Prospects that will further widen the U.S. yield gap with Japan, whose central bank stuck to super-easy policy on Thursday, have triggered the yen’s drop below the key 130 level against the dollar for the first time in 20 years.