Against the backdrop of assessing US inflation, dollar-selling momentum has eased, and dollar-yen is holding in the low to mid-¥157 range. Ahead of tonight's US core PCE price index release, yen movements are expected to remain limited due to caution over coordinated intervention.
In European and US trading on the 29th, dollar-yen was expected to remain firm, while views emerged that yen-buying pressure was likely to persist. Euro-dollar declined, while dollar-yen held around the mid-¥157 range. The direction of US long-term yields is likely to affect the dollar outlook.
Dollar buying was temporarily supported by another rise in oil prices and uncertainty over the outlook for the Middle East. US monetary policy will remain in focus, and some market participants believe dollar buying will be difficult to suppress while expectations of tighter policy persist.
However, many market participants believe yen selling will be restrained as developments concerning the Middle East and caution over coordinated intervention following the Japan-US summit intensify. Concern over coordinated intervention by the Japanese and US finance and monetary authorities could also leave the market lacking a clear catalyst.
The US core PCE price index due tonight is expected to show a slight acceleration, and some believe conditions in which the dollar is difficult to sell will continue. At the same time, a marked deterioration in US economic sentiment could temporarily ease expectations of tighter monetary policy.