In the New York market, the prevailing view is that dollar-yen will continue testing the ¥160 level. Against a backdrop of an upside surprise in the US October CPI and hawkish comments from senior FRB officials, attention is focused on movements in US long-term yields tonight and the result of the 30-year Treasury auction.
Dollar-yen during New York hours is expected to test the ¥160 level, while caution over intervention by Japan’s currency authorities to curb yen depreciation is also present. Expectations of an additional rate hike at the December FOMC meeting have strengthened against a backdrop of the higher-than-expected US October CPI and hawkish comments from senior FRB officials.
During Tokyo hours, the US 10-year Treasury yield in off-hours trading recovered to the 5% range, supported by a move above the previous day’s high. While some expect the dollar to remain firm, ¥160 is widely viewed as an important threshold.
US initial jobless claims and October existing home sales are scheduled for release tonight, along with speeches by several US monetary officials. If concerns over inflation intensify following the CPI upside surprise, dollar buying could accelerate.
In the US Treasury market after the holiday closure, attention will focus on movements in US long-term yields in off-hours trading. Depending on movements after the 3 a.m. 30-year Treasury auction, long-term yields could move further, and some expect this to support a move above ¥160.