In the New York market on 30 September, dollar/yen moved from the upper ¥156 range to ¥157.53 and closed near ¥157. On 1 October, nervous range-bound trading is expected to continue around the ¥157 level.
In the New York foreign exchange market on 30 September, dollar/yen fell to ¥156.64 before rising to ¥157.53 and closing at ¥157.45. As the US core PCE price index for August came in below expectations, expectations for an October FOMC rate hike receded, long-term yields fell and dollar selling prevailed. Subsequently, rates turned higher on an improvement in the September Chicago Purchasing Managers' Index (PMI) and higher crude oil prices, prompting renewed dollar buying.
Dollar/yen is expected to remain under pressure today, 1 October. While dollar-buying pressure based on the US-Japan interest-rate differential remains firm, with US long-term yields rising to the 5.30% range, repeated comments by senior officials in both Japan and the US cautioning against yen depreciation are keeping concerns over government and Bank of Japan foreign-exchange intervention in place and capping gains. In addition, expectations for a rate hike have eased somewhat following the weaker-than-expected US PCE reading for August, but leading indicators ahead of tomorrow's US employment report for September are mixed, and many market participants believe the decision on whether to raise rates in October will depend on the results.