In early NY trading, dollar-yen fell to the 158 level, but after temporarily declining to around 158.9 yen, it returned to the 159 level. The move was driven by last week's U.S. economic data coming in below expectations, causing expectations for an early Fed rate hike to recede.80
In today's NY foreign exchange market, the dollar traded softly and dollar-yen temporarily fell to the 158 level, but buying back lifted it to the 159 level. All of the U.S. economic data released came in below market expectations, causing market pricing for the Fed's rate-hike outlook to recede. This contained short-term upward pressure on the yen. In the current situation, cross-yen pairs have generally been trending higher, and the yen's persistent weakness continues to be observed.
The market is closely watching the FOMC minutes scheduled for release this week, but the prevailing view is that the probability of a September rate hike is unlikely to recover sharply. In short-term money markets, the probability of a September rate hike remains around 30%, down significantly from approximately 70% at the end of July. Market participants point to a period in which dollar weakness is likely to continue.
Ahead of today's 23:00 NY cut, option expiries have been observed at 159 yen and 159.50 yen. Although dollar-yen's movements are limited, resistance to yen depreciation remains firm, and price action around these levels is likely to remain in focus in the coming hours. The yen's overall response is seen as subdued.