Dollar-yen moved back toward around ¥160 at the end of September. While currency intervention and expectations of rate hikes have reignited yen depreciation, the BOJ's response and the outlook for US rate hikes are the market's focus.
Dollar-yen briefly moved toward yen appreciation in the ¥152 range in the first half of September, but subsequently returned to the ¥159 range, with currency intervention and expectations of rate hikes prompting a move back toward yen depreciation. The view has been expressed that the market's yen depreciation was encouraged by the BOJ's post-intervention statement, which did not tilt hawkish.
The US Federal Reserve took a hawkish stance, strengthening the view that further rate hikes may be possible. As concerns spread over movements in long-term interest rates and oil prices, as well as fluctuations in foreign-exchange markets, the pace of rate hikes through year-end has become a focus.
Differences between Japanese and US monetary policy, movements in long-term interest rates, and political risks after the midterm elections will affect the dollar-yen range. The expected range through year-end is indicated to be limited to movements between a lower bound in the ¥155 range and around ¥160.
President Trump's response after the midterm elections and developments in the Middle East may also affect dollar-yen through their impact on oil prices and interest-rate markets. The market is closely watching risk factors on both the yen appreciation and yen depreciation sides.