In the New York market on the 7th, the dollar-yen struggled to move above the ¥158 level, with its upside capped. While the decline in long-term US Treasury yields and reduced expectations for a Bank of Japan rate hike curbed dollar buying, the widening US August trade deficit, European fiscal developments and geopolitical risks could affect cross-yen currencies.
In the New York market on the 6th, the dollar-yen rose to ¥158.22 before falling back around ¥158 and closing at ¥157.92. The decline was driven by concerns about slower growth following comments by US Treasury Secretary Bessent and the widening US August trade deficit, as well as lower long-term interest rates. Expectations for aggressive Bank of Japan rate hikes have receded, and some market participants expect the yen to remain weak.
In Europe, the euro was bought back after France unveiled its fiscal plan, heightening attention on cross-yen moves. Geopolitical risks around the Strait of Hormuz and factors related to the Russia-Ukraine situation could also spill over through crude oil prices.
Going forward, attention will focus on trends in the US-Japan interest-rate differential, long-term US Treasury yields, and European fiscal and geopolitical risks, along with concerns about intervention by the government and the Bank of Japan. Cross-yen moves will also require continued close monitoring.