Dollar-yen is expected to become more active in response to expectations of faster BOJ rate hikes and developments in domestic indicators. With the market awaiting the release of US economic data, developments in the Middle East and oil prices will also be closely watched.
In the New York market on the 7th, dollar-yen fell as low as ¥154.06 before recovering to the lower ¥154 range, after which price movements slowed. Euro-dollar converged within a range in the lower $1.16 range. Expectations of a faster pace of BOJ rate hikes are weighing on the market, and a view is spreading that downside pressure may intensify in the short term.
In the Tokyo market, yen buying is expected to lead, against a backdrop of expectations for faster BOJ rate hikes and a potential shift by institutional investors such as GPIF toward domestic assets. Comments from key Japanese and US officials are limited this week, and market participants appear keen to assess the speech by a BOJ Policy Board member scheduled for the 10th, although vigilance is considered necessary for unexpected comments.
The revised figure for real GDP for the April-June quarter, scheduled for release today, is expected to be revised upward from preliminary quarter-on-quarter growth of +0.3% to +0.4%, while annualized growth is expected to be revised from +1.1% to +1.6%. A figure above expectations could raise expectations for an early rate hike, while a downward revision could lead to those expectations receding.
Developments in the Middle East and WTI crude oil prices will remain a focus of market attention. If crude oil rises into the $93 range, it could fuel inflation concerns and push up long-term US interest rates, making it a potential factor supporting the dollar. China's August trade balance is scheduled to be released, and its impact on a US-China summit is being discussed.