[MARKET ANALYSIS] DXY stronger on Fed rate hike bets and higher energy prices; JPY underperforms

The JPY underperformance here fits the established pattern of yield differential driven moves, where the currency's prior strength built on expectations of narrowing differentials unwinds quickly once the repricing runs the other way; episodes of this kind tend to persist until the differential story is confirmed or contradicted by the decisions themselves. The case distinction that matters is between a hike that is already priced and one accompanied by guidance on the follow-on path, since money markets assigning a high probability to the move means the rate itself is largely in the price and the statement and press conference carry the residual risk. The commodity channel runs through the terms of trade: higher energy prices support the Loonie against peers while working against energy importers' currencies, and disruption to Gulf infrastructure has historically kept that premia volatile around headlines rather than trending smoothly. The dual meeting risk this week, with the BoJ decision following the Fed, creates the asymmetric setup that has recurred in past paired cycles: the second central bank inherits the first's repricing, and board guidance on the pace of subsequent hikes matters more than the move itself. Event risk of this kind has tended to keep DXY and USD/JPY within established ranges until the decisions land.