Following developments in the New York market on the 8th, USD/JPY traded in the ¥158 range. The contradiction between Prime Minister Takaichi's “non-reflationist” remarks and her stance on tax cuts has become a focus of market attention.
In the New York market on the 8th, WTI crude oil movements were restrained against the backdrop of remarks by President Trump, while long-term US Treasury yields declined. In tandem, USD/JPY fell from 158.37 to 157.52. Developments in US and European interest rates and crude oil are likely to affect trading in the Tokyo market.
In today's Tokyo market, attention will focus on responses to questions from opposition parties in the House of Councillors regarding Prime Minister Takaichi's policy speech delivered on the 5th, while markets monitor long-term Japanese and US interest rates and crude oil prices. Although the Prime Minister said, “I am not a reflationist,” she showed an active stance toward consumption-tax cuts, and markets may become wary that her continued fiscal expansion could become a risk factor.
Meanwhile, the absence of discussion of the basic portfolio at the GPIF's September meeting led to growing views that the repatriation of funds into domestic bonds had lost momentum. However, if long-term Japanese and US interest rates continue to rise, expectations of an increase in the domestic-bond allocation may resurface.
Technically, USD/JPY continued to trade around ¥158.53, near its 200-day moving average, while the lower boundary of the Ichimoku cloud fell to ¥157.95. Prices are expected to move within the cloud next week, and reading the market outlook remains difficult.