The yen rose to the first half of the ¥157 range in Tokyo trading early on the 6th. Against a backdrop of a sharp drop in US stocks and concern over AI regulation, risk-off yen buying led the Tokyo market.
In the Tokyo foreign exchange market early on the 6th, the yen rose to ¥157.29–31 per dollar, strengthening by about 89 sen from the ¥157.29–31 level at 5 p.m. the previous day. It was bought to around ¥157.27 during the day, recovering to its highest level in nearly a week since 30 October.
Technology and semiconductor stocks plunged in the US stock market the previous day, reducing investors’ risk tolerance. The Dow Jones Industrial Average fell $1,833.06 from the previous day, the Nasdaq Composite dropped 5.52%, and the SOX index fell 12.2%, marking exceptional declines for the indices. Concern spread over tighter regulation of data-center construction supporting AI investment.
Yen buying led the Japanese market in response to the turmoil in US markets. Overnight Nikkei 225 futures on the Osaka Exchange fell sharply, heightening concern over the future direction of the Nikkei 225. The unwinding of overseas investors’ hedges against yen selling and dollar buying also supported the yen’s appreciation.
Expectations of further increases in US long-term interest rates receded, and the US 10-year Treasury yield fell to around 4.81%. According to FedWatch, the probability of a rate hike at the December FOMC fell to about 70% from the previous day, with interest-rate trends contributing to the yen’s appreciation. The yen also strengthened against the euro as the euro weakened.
The direction of the yen in the Tokyo market is expected to depend on movements in semiconductor and AI-related stocks, while concern remains over moves driven by the long-term US-Japan interest-rate differential.