USD/JPY has remained range-bound around ¥158, with moves up toward ¥158.50 and down toward ¥157.40. Although the FOMC minutes pointed to the possibility of another rate hike before year-end, the market has already priced this in and remains stuck in a narrow range.
In FX trading from Wednesday 7 October through Thursday 8 October, USD/JPY remained roughly flat around ¥158 and was considered unlikely to break out of its range absent an unexpected market catalyst. ¥158.50 was cited as the upside reference and ¥157.40 as the downside reference.
Japan's real wages rose 1.5% year on year in August, marking an 8th consecutive month of gains, while nominal wages rose 3.8% year on year. This has led to indications that domestic demand trends could affect localised market moves.
A New York Fed survey showed 1-year-ahead inflation expectations at 3.90%, above market expectations, with 3-year-ahead expectations at 3.25% and 5-year-ahead expectations at 3.00%. This is affecting the outlook for short- and long-term interest rates.
While many participants in the Fed's FOMC indicated that it would be appropriate to raise the level of the policy rate before year-end, the minutes said that the decision would depend on incoming information and the balance of risks.