The report covers moves in USD/JPY ahead of the release of US September CPI and views from major financial institutions. It also discusses Japan-related market remarks and expectations for the Bank of Japan, including the Reserve Bank of Australia's rate-hike decision.
In the foreign-exchange market from Tuesday, 13 October, to Wednesday, 14 October, position adjustments took place ahead of the release of US September CPI, while remarks by the New York Fed president at times limited the dollar's rebound. Although the market continued to price in the outlook for a rate hike before year-end based on movements in long-term US yields and comments from Federal Reserve officials, it maintained the view that the need for an additional rate hike in 2027 is not high at this point. USD/JPY was expected to remain volatile depending on US CPI, while retaining the possibility of testing the ¥159 range.
(1) The release of the Reserve Bank of Australia's (RBA) minutes showed that the board had unanimously decided to raise its policy rate to 4.60%. This indicated that Australia's elevated interest-rate environment is expected to persist.
(2) Regarding the Bank of Japan, Prime Minister Takaichi Sanae (高市早苗) and BOJ Governor Ueda Kazuo (植田和男) said in answers to questions in the House of Representatives that the advantages and disadvantages of a weaker yen remain unchanged, and indicated that the Japanese and US authorities intend to work to maintain an orderly foreign-exchange market. Governor Ueda said that the upward trend in wages and prices is approaching a level of around 2%, and pointed to the importance of monetary policy operations aimed at price stability.
(3) Bloomberg reported expectations that the Bank of Japan will leave its policy rate unchanged at its monetary policy meeting at the end of this month. People familiar with the matter said there is no need for rate hikes at two consecutive meetings.
(4) New York Fed President Williams said, "There is no reason at this point to expect that further rate hikes will be necessary in 2027." The market consequently moved to reassess the balance of expectations for a rate hike before year-end.