USD/JPY is expected to trade around the ¥158 level. Although the US October employment report was strong, expectations of an additional Bank of Japan rate hike and uncertainty surrounding AI investment remain factors capping the upside. The report summarizes six days of market movements and the outlook for key indicators.
According to Gaitame.com's daily report, USD/JPY rose on a closing-price basis on the 6th, but failed to move decisively above the ¥158 level. Nonfarm payrolls in the US October employment report exceeded market expectations, prompting dollar buying, while the narrower rise in long-term yields and persistent expectations of an additional Bank of Japan rate hike capped the upside. The near-term range was seen at approximately ¥157.8–¥159.0. The area around the 200-day moving average, at approximately ¥158.69, was also likely to attract attention.
The outlook for USD/JPY reflects both the strength of the US labour market and the possibility of further Federal Reserve rate hikes, together with the direction of Bank of Japan monetary policy. Market attention is focused on the release of the US October Consumer Price Index (CPI), while trading is expected to remain sensitive to share-price movements in the short term. Uncertainty over AI investment was also cited as a factor restraining straightforward dollar buying.
The key indicators on the 6th included Japan's consecutive rise in real wages, an increase in German industrial production, the strong US employment report and remarks by the Governor of the Bank of Japan. Nonfarm payrolls increased by 165,000 from the previous month, the unemployment rate fell to 4.1%, and average hourly earnings rose 3.1% year on year, exceeding expectations. The September figure was revised upward, and the preliminary University of Michigan consumer sentiment index also exceeded market expectations.
In equity, bond and commodity markets, major indices generally weakened. Movements in US Treasury yields and long-term interest rates, together with the dollar's direction, affected USD/JPY trading within its range. Attention is expected to shift to the US CPI and announcements and remarks related to the Bank of Japan and the Federal Reserve. Whether the pair breaks above its range is thought to depend on further monetary-policy surprises.