Dollar buying accelerated following hawkish remarks by the Fed chair, bringing the yen back toward 162 per dollar. Expectations are also growing that US long-term interest rates could approach the 3% level, and volatility continues in the foreign exchange market.
Selling of the yen and buying of the dollar accelerated rapidly in the New York market, briefly pushing the yen down to the low 160s per dollar. Following a speech by the Fed chair, reports indicated that demand for the dollar had increased as the remarks took on a more hawkish tone.
In long-term interest rate markets, the yield on the 10-year US Treasury note drew investor attention and ended trading at 4.72%. Market participants grew increasingly alert to upward pressure on long-term interest rates as expectations for a September rate hike resurfaced.
The Ministry of Finance announced that total yen-buying, dollar-selling intervention between 30 July and 26 August amounted to ¥15,399.3 billion, including coordinated intervention by Japan and the United States. Some market participants believe the effect of the intervention is already beginning to fade.
Market indicators such as FedWatch showed expectations for a September rate hike regaining the upper hand over expectations that rates would remain unchanged after the probability of a hike exceeded 60%. This has brought renewed uncertainty to the market outlook for interest rates.
Key areas of focus ahead include developments in the preliminary budget requests for fiscal 2027, the G20 meeting of finance ministers and central bank governors to be held from 31 August to 1 September, and the employment report due on 4 September.