The yen has moved sharply, gaining more than ¥5 against the dollar in two days. Against a backdrop of a dovish shift by Fed Governor Waller and expectations for a BOJ rate hike, views are spreading that the unwinding of yen carry trades could resume. Tonight’s US jobs report could become the market’s next turning point.
Over the past two trading days, dollar-yen plunged from around ¥160 per dollar to the ¥155 range, with the yen gaining slightly more than ¥5. In the market, the relative direction of the Fed’s and BOJ’s monetary policy outlooks has become a major factor driving the yen.
Reports say that remarks by Federal Reserve Governor Waller took a relatively dovish tone, causing expectations for an additional rate hike in September to recede. In Japan, meanwhile, expectations for an additional BOJ rate hike are reportedly strengthening.
As expectations grow that the US-Japan interest-rate differential will narrow, yen carry trades, which have used the low-yielding yen as a funding currency, may come under pressure to unwind. The resulting impact on related asset markets is attracting attention.
Investors are viewing tonight’s US jobs report as the next turning point, with attention focused not only on foreign-exchange movements but also on the potential impact on equities, gold and cryptoassets.