The yen was little changed in the low ¥158 range. Against a backdrop of higher stock prices, real-money dollar buying capped the upside, with dollar-yen trading at ¥158.01–¥158.03 per dollar.
The yen weakened slightly in the morning of the 10th, with dollar-yen at ¥158.01–¥158.03 at noon. The Nikkei average rose sharply above ¥60,000, and yen selling and dollar buying by overseas investors to hedge unrealized gains weighed on the currency.
Buying spread across AI-related stocks in the US market, and gains in the Tokyo market briefly exceeded ¥1,800, taking the Nikkei above ¥60,000. Overseas investors tend to sell yen when stock prices are rising, and conditions remained unfavorable for yen appreciation.
Real-money demand for dollars associated with the 5th and 10th of the month (gotobi) capped the yen's upside. Ahead of the central rate fixing before 10 a.m., domestic banks were reportedly dominant dollar buyers, while domestic importers were also actively selling yen and buying dollars.
Lower oil prices supported the yen, while the nearest-month WTI contract fell below $86.85 amid expectations of easing tensions in the US-Iran situation. At the Bank of Japan's next meeting, the rate-hike discussion is expected to retain an element of caution while gauging momentum. Technically, the cloud's upper boundary at ¥158.42 and the 200-day moving average at ¥158.69 were watched as upside guideposts. Ahead of the CPI release, caution over dollar downside spread.