Dollar-yen rose into the upper ¥158 range in yesterday's trading, with buying accelerating in the New York market. Expectations for a December rate hike strengthened after strong US employment data, while some caution remains about chasing the upside.
In yesterday's trading, dollar-yen rose into the upper ¥158 range, after which cautious views spread about moves near the ¥159 threshold. It broke above ¥158.00 in the morning session in London and was briefly bought to around ¥158.30, but as activity picked up in New York, it was also pushed back below ¥158.
The market focused on US employment-related indicators from August onward. September JOLTS job openings significantly exceeded expectations, strengthening expectations for a US rate hike in December. Although the Bank of Japan could raise rates in December, views spread that the Japan-US interest-rate differential would be maintained, stimulating trades focused on the rate gap.
While caution remains about chasing the upside, dollar-yen is seen as firm around the ¥158 level. Euro-yen rose from the upper ¥176 range into the ¥177 range, leading moves in the yen crosses. High levels of yen-buying in IMM positions were also cited as a factor supporting downside firmness.
Vote counting in the US midterm elections is expected to begin by this morning Japan time, and the results could trigger a temporary market reaction. However, attention could shift after the election to geopolitical risks, including developments related to attacks on Iran, and many expect the overall trend of dollar strength and yen weakness to continue.