Dollar-yen remains range-bound around ¥158, while upside surprises in U.S. inflation data, concerns related to AI, the BOJ's rate-hike stance and movements in French government bonds are contributing to a turbulent market environment. Ahead of key events, caution over a major market move is spreading.
Dollar-yen has remained range-bound around ¥158, but developments in U.S. economic data and concerns overseas are heightening market caution. AI-related concerns are affecting the direction of U.S. interest rates, while risks in Europe are also weighing on the yen.
U.S. September CPI rose 3.7% year on year and PPI rose 6.3%, both exceeding expectations, while the 10-year Treasury yield fluctuated alongside movements in crude oil prices. Against this backdrop, dollar-yen briefly moved toward yen depreciation, approaching ¥159, before the yen strengthened again to just below ¥158 as the market monitored U.S. interest rates.
BOJ Governor Ueda (植田) indicated a policy of "raising [rates] to adjust the degree of monetary easing" and emphasized a willingness to accelerate rate hikes to prevent underlying inflation from exceeding 2%. Katayama (片山) of the Ministry of Finance also emphasized the importance of closely monitoring market developments.
Rising French government bond yields and instability in Europe have unsettled the euro area, and the resulting developments may continue to act as a constraint on factors supporting dollar-yen upside.
The focus is expected to be on whether the market moves against the backdrop of the FOMC and the BOJ's monetary policy meeting at the end of October, as well as the results of the U.S. midterm elections. Caution is warranted over a possible escalation into a major market move.