USD/JPY fell to ¥156.58 yesterday before firming to ¥157.53, while concerns about intervention intensified ahead of the Japan-U.S. summit. There are concerns that further increases in the fiscal burden could affect the yen's direction.
In overseas markets yesterday, USD/JPY temporarily fell to ¥156.58, but yen selling and dollar buying intensified after the European and U.S. markets opened, pushing the pair up to ¥157.53. EUR/USD softened to around $1.1462. A weaker euro and stronger dollar were also observed.
In today's Asian markets, dollar-buying sentiment is likely to provide support, while concerns about Japanese intervention are expected to cap gains, leaving the pair range-bound. Dollar buying prevailed despite lower oil prices and falling U.S. Treasury yields in the New York market. The dollar index has shown signs of recovery since the FOMC meeting.
It has been reported that at the Japan-U.S. summit, U.S. President Trump is expected to call on Japan to increase defense spending and contribute to energy security, raising concerns about the risk of fiscal expansion in Japan. Tensions over U.S. demands could increase downward pressure on the yen.
The conditions for intervention are said to differ from those in the past, and reports indicate that the U.S. stance against yen weakness is likely to strengthen. In light of Treasury Secretary Bessent's remarks and the background to coordinated intervention following the G20 meeting, close attention is considered necessary regarding future action.
Japan's domestic markets will be closed today for a public holiday, and no particularly noteworthy economic indicators are scheduled, although several potential market drivers, including an interview with the Governor of Australia's RBA, are on the agenda.