The dollar-yen pair moved sharply against a backdrop of a steep decline in US stocks and higher oil prices. Although it rebounded from the lower edge of the cloud, volatile trading is expected ahead of the US ISM report and the midterm elections.
In the New York market, US stocks fell sharply, with the Nasdaq down nearly 4% at one point. As buying of US Treasuries as a safe haven intensified, the US 10-year Treasury yield fell into the 4.92% range. Yen buying and dollar selling led the intraday market, alongside expectations of a Bank of Japan rate hike, and the dollar-yen pair reached the low ¥156 range.
Once the selling subsided, WTI crude oil futures surged into the $104 range as tensions escalated in the Middle East. Against this backdrop, dollar buying to cover short positions prevailed, and the dollar-yen pair rose to ¥157.641.
In the US market today, the October ISM Manufacturing Index, due at 24:00, is expected to be the focus. Remarks by a senior Fed official on additional rate hikes were also reported, and developments in sentiment, employment and the prices-paid index are likely to be directly reflected in the dollar market.
The market is expected to remain sensitive this week to developments related to the US midterm elections. Depending on headlines before and after the vote, expectations for policy momentum and market risk sentiment may fluctuate.