USD/JPY rose to around ¥163 temporarily after the FOMC, then moved back to the ¥156 range. Movements in long-term interest rates in Japan and the United States, along with equity market trends, are the key areas of focus.
USD/JPY temporarily rose to around ¥163 against the backdrop of a narrowing interest-rate differential between Japan and the United States, but some believe that changes in the differential following the latest FOMC will determine whether yen weakness can persist. Movements in Japan’s long-term interest rates have also been cited as an important factor.
At the FOMC, the decision was made to hold off on a rate hike. Although there had been views that concerns about inflation would intensify, an acceleration in the rise of long-term U.S. interest rates was ultimately avoided. In response, USD/JPY was reported to have risen further into the ¥156 range.
Share price movements are also attracting attention as a factor that can have a cyclical impact. Against the backdrop of rising share prices since late June, yen-selling activity through yen carry trades could shift toward yen buying as a result of a sharp decline in U.S. equities.
Going forward, movements in long-term interest rates in Japan and the United States, as well as changes in Japan’s long-term interest rates, are viewed as important factors that will determine the direction of USD/JPY.