Dollar-yen was range-bound in the ¥158 area at the start of the week. The direction of long-term US yields and US and Japanese monetary policy announcements will be the market’s focus next week. With a range of events ahead, including national CPI on the 23rd, the FOMC on the 28th and the Bank of Japan meeting on the 30th, the market remains cautious.
In Tokyo trading at the start of the week, dollar-yen remained range-bound, centered around ¥158.00. Last week saw a mix of lower long-term US yields and dollar selling, making market participants reluctant to adjust their positions aggressively ahead of next week’s policy announcements. Euro-dollar remained subdued in the mid-1.12 range.
The focus this week is the direction of long-term US yields. While CPI and PPI exceeded market expectations, confirming inflationary pressure, credit concerns over cloud assets serving AI applications drew funds into US Treasuries, and the decline in long-term US yields created selling pressure on the dollar. Some expect further deterioration in credit conditions to push long-term US yields lower and make it easier for dollar-yen gains to be capped.
Next week brings the Federal Reserve’s FOMC announcement on 28 October and the Bank of Japan’s monetary policy meeting on 30 October, with policy developments expected to determine the direction of the market. Policy announcements from the ECB and other central banks will also overlap, making it a week packed with major events.
In corporate earnings, Netflix, Meta and Tesla are due to report. The market will focus on the outlook for AI-related capital investment and monetization. In addition to price and growth indicators, comments from the US president and developments in oil and gold markets will remain market factors.