US inflation data last week came in on the strong side, but the dollar's upward momentum was limited. Ahead of next week's FOMC, dollar-yen is expected to continue seeking direction around ¥158.
US inflation data last week came in on the strong side, but the dollar's upward momentum did not strengthen significantly, and dollar-yen traded mainly in a range just below ¥157.50 to ¥159.00. Expectations for additional rate hikes rose in some quarters, but conditions remained such that this was unlikely to have a major impact on the overall market.
Few US economic indicators are scheduled for release this week, and the start of the blackout period ahead of the FOMC has also reduced opportunities for Fed officials to speak. Markets therefore appear short of catalysts, and dollar-yen is expected to show limited direction.
With next week's FOMC on the 27th and 28th in view, wait-and-see sentiment is likely to strengthen. Dollar-yen is expected to continue trading mainly around ¥158.00, with buying likely to emerge near the mid-¥157 range.
Uncertainty remains around the euro amid concerns including a renewed escalation in protest-related disruption, and this may affect euro-yen and euro-dollar at times. Although trading is expected to remain centered on dollar-yen, caution is spreading over developments in major currencies as well.