Dollar-yen has continued to trade in the ¥159 range, with market activity subdued despite ample catalysts. Attention is focused on developments against the backdrop of rising expectations for a U.S. rate hike and monetary policy trends in Japan and the United States.
Dollar-yen has continued to remain in the ¥159 range in recent trading. Although there are ample catalysts, movements in the foreign exchange market have been limited, and the dollar's strength and yen's weakness have continued to be observed.
Interest rate movements lie behind the current backdrop. Following the hawkish stance of the U.S. Federal Reserve chair, market expectations for a U.S. rate hike in September have risen to above 65%. Expectations for a Bank of Japan rate hike as a measure against yen depreciation have been reported, while circumstances continue to hint at the possibility of intervention.
Long-term bond yields are trending higher in both Japan and the United States, with the yield on newly issued 10-year Japanese government bonds rising to near 3.00%. The 10-year U.S. Treasury yield has been trading in the 4.78% range, while expanding fiscal spending has also contributed to selling pressure on bonds.
Geopolitical risks have risen again as exchanges of attacks between the United States and Iran have resumed. NY crude oil was briefly bid up to the $87 range and remains elevated. Buying pressure on the dollar is prevailing, but the dollar index has also shown signs that the peak of its rapid move may be passing, converging toward its 21-day moving average. Attention will focus going forward on developments in overseas markets and the results of U.S. economic data releases.