With long-term yields rising in both the US and Japan, USD/JPY is consolidating around the ¥159 level. Higher WTI crude prices and fiscal and interest-rate developments are expected to determine the market's direction.
In overseas markets on the 17th, USD/JPY rose as high as ¥159.60. Rising US long-term yields, against the backdrop of strong US housing data, and a further rise in crude oil prices are said to have encouraged dollar buying and yen selling. In the Tokyo market, the 50% retracement level near ¥159.61 is expected to attract attention as a psychological milestone, with market participants watching developments in US and Japanese long-term yields.
The US 30-year Treasury yield rose to 5.31%, its highest level since June 2007. The 10-year Treasury yield also continued to rise, while the 2-year yield remained on a downward trend. The yield curve is becoming increasingly twisted, and upward pressure on long-term yields is said to be strengthening overall.
Japan is also seeing a rise in long-term yields, with the country's 30-year government bond yield climbing to 4.08%. Super-long-term bonds are being sold in both the US and Japan, suggesting that domestic factors, as well as external ones, are affecting the yen exchange rate.
Tensions in the Middle East and concerns about fiscal management have also been cited as market factors. As dialogue and a stance of vigilance continue over Iran, higher oil prices could increase pressure to buy dollars and sell yen. At times, uncertainty over Japan's fiscal discipline may also heighten market uncertainty.