The yen rose against the dollar in the Tokyo foreign exchange market on the morning of the 26th, with the currency briefly bought up to around ¥158.88. Real-demand yen buying and dollar selling reportedly emerged against a backdrop of expectations for easing tensions in the Middle East and lower oil prices.
In the Tokyo market on the morning of the 26th, the yen strengthened, with dollar-yen at ¥159.01–02 as of noon, up 43 sen from 5 p.m. the previous day. Shortly after 11 a.m., it briefly rose to around ¥158.88. Domestic exporters and other real-demand participants were reportedly buying yen and selling dollars, while expectations of easing tensions in the Middle East and declines in U.S. crude oil futures supported the yen.
The trading range was ¥158.88–159.26. Some market participants said dollar selling was dominant ahead of the fixing, and exporters were reportedly buying yen and selling dollars. Stop-loss dollar selling when the pair fell below ¥159 was also reported in the afternoon.
The New York Times reported that the U.S. State Department was preparing for diplomats evacuated from the Middle East to return. Together with the decline in the front-month WTI contract to $82.36, this supported expectations of lower oil prices and helped sustain the yen-buying and dollar-selling trend, amid hopes that supplies of Middle Eastern crude would return to normal.
Japan's services producer price index for July, released on the 26th, rose 3.6% year on year. Australia's consumer price index rose 3.5% year on year, in line with market expectations and slowing from the previous reading. Although dollar buying on geopolitical concerns had dominated the previous day, there was also some yen buying as market participants viewed the U.S. Treasury's sanctions package as being within expectations.