?FX: FOMC rate cut, ripple effects on USD, Japanese stocks, and cryptocurrencies! Possibility of Bank of Japan statements and a yen-strengthening trend

Tonight's topic is the FOMC rate cut that investors around the world are watching with bated breath. With a 0.25% cut nearly certain, stock markets tremble with expectations, currency markets probe for a yen-strength scenario, and even cryptocurrencies grow heated.

At this moment of mixed hopes and anxieties, what kind of景色 should we imagine? Now, quietly listening with our ears, let's think about it together in depth.

? Why Now? The Background of the FOMC Rate Cut

The FOMC is where monetary policy for the FRB (Fed) is decided. The rising expectation for a rate cut this time is because weakness in the labor market has begun to appear. August’s employment statistics showed that nonfarm payrolls rose less than expected, and the unemployment rate rose to 4.2%. Inflation, as measured by the core PCE, is 2.9%, approaching the 2% target — in other words, a judgment that overheated price growth is cooling.

Powell’s remarks at Jackson Hole immediately pushed up expectations for a rate cut. He hinted that “policy adjustments may be necessary.”Forecasts put the probability of a 0.25% cut at over 93%. It can be said to be almost fully priced in.

However, if there were a bold 0.5% cut or if policy were left unchanged, markets would shake greatly. That, too, unsettles investors. Which possibility would you bet on?

? U.S. Equity Rally, Japanese Equity Volatility

The stock market is the first to react to a rate cut. Lower rates make it easier for companies to fund themselves, and stock prices tend to rise. Historically, the S&P 500 has shown positive returns during easing cycles. This time, tech stocks and AI-related stocks are expected to take the lead.

On the other hand, Japanese equities are a bit more complex.If the yen strengthens, it could hurt exporters and weigh on the Nikkei in the短期.However, with fiscal stimulus expectations during the presidential race and spillover from U.S. stock gains, a firm mid-to-long-term trend is also possible. In other words, “short term yen strength risk, mid-to-long term growth expectations.”

Thus, the question is how to balance these two views. Which position would you take?

? Yen Strength Scenario Triggered by Bank of Japan Governor’s Remarks

What draws the most attention this time is the currency market. Rate cuts tend to weaken the dollar and push the yen higher. In markets, there is talk that USD/JPY could fall below 146. Further, if the BOJ signals further rate hikes, some expect it could move into the 130s rapidly.

There are even voices that say a 15% tariff cost could be offset by yen strength. This is an interesting idea. Trump-era policies interact intricately with exchange rate movements. yen strength hurts exporters, but benefits importers and consumers.

Depending on one’s position, it can be “painful yen strength” or “beneficial yen strength.” How would you respond to this yen-strength risk?

? Ripple Effect on Cryptocurrencies

Not only stocks and currencies, but cryptocurrencies are also prone to the influence of the FOMC. Rate cuts increase liquidity, drawing risk money into Bitcoin and other digital assets. In past rate-cut cycles, BTC surged. In the bond market, yields fall,making commodities like gold and oil relatively more attractive.

Funds flow into both safe assets and risk assets — a somewhat mysterious phenomenon common at this timing. So, do you think Bitcoin will jump on this rate cut, or is it already fully priced in and will remain calm?

? Risks Investors Should Be Aware Of

If the cut is 0.25%, it may be “as expected,” and market reaction could be limited. A surprise would be a 0.5% cut or a hold.In that case, the market could swing to risk-off all at once. The familiar pattern: “buy the rumor, sell the news.”

Optimistic expectations push stock prices higher, but when the actual rate cut occurs, profit-taking may occur. This pattern may repeat this time as well.Calm, steady investors focus on the medium-to-long-term story rather than short-term volatility.So, which side will you take?

? Yen High Trend? A Momentary Shake or a New Trend?

The FOMC rate cut will mark a major turning point for markets in the latter half of 2025. U.S. stock gains, yen strength risk, volatility in Japanese equities, and spillovers into cryptocurrencies — all present opportunities for investors, but also trials.Furthermore, following the FOMC statements, if the BOJ governor hints at rate hikes in his press conference, the narrowing of the U.S.-Japan interest rate gap could drive rapid yen appreciation, which cannot be ruled out.

However, given that U.S.-Japan tariffs have been raised to 15%, a strong yen would be painful for exporters, so such movement is unlikely in reality. Yet, if the long-term stance signals continued rate hikes, a gradual yen-strength trend could begin rather than a sharp rise.

As mentioned in the All-Weather Dojo example, profit is eroded when the yen strengthens.Therefore, it may be important not to be swayed by short-term news, but to shape a portfolio with a long-term perspective. What do you think?