In the New York market on the 10th, stronger-than-expected US CPI data and rising long-term yields lifted USD/JPY to around ¥158.85 at one point. In the Tokyo market, caution is expected to persist over comments from Fed officials, remarks from Japanese officials countering dollar strength and yen weakness, and the possibility of intervention.
In the US market on the 10th, headline October CPI rose 0.4% m/m and core CPI rose 0.3%, both exceeding expectations. Along with rising US long-term yields, this lifted USD/JPY to the upper ¥158 range at one point. EUR/USD fell to around 1.1146.
USD/JPY in the Tokyo market is expected to continue rising on the back of the strong US CPI data, but caution is also expected to spread over comments from Fed officials, intervention by Japanese authorities to counter dollar strength and yen weakness, and the possibility of yen-buying intervention. FedWatch shows that the probability of a 25-bp hike at the December FOMC has risen, while the probability of a 50-bp hike has also increased.
Market attention is also focused on the BOJ's decision scheduled for today. While some expect the probability of an additional rate hike at the December BOJ meeting to remain high, others point out that USD/JPY's upside could be capped depending on the BOJ's policy stance. Trends in opinions expressed at past meetings will also be closely watched.
As part of the key schedule, Fed Governor Paulson, Fed Vice Chair Bowman and Chicago Fed President Goolsbee are scheduled to speak from 8:30 onward. Market direction could change depending on subsequent headlines. The risk of a government shutdown related to the deadline for temporary government funding also remains a concern.