In early New York trading, dollar-yen fell back into the ¥157 range. Despite U.S. September PPI exceeding market expectations, the move to buy yen and sell dollars was limited.
Dollar selling on rallies prevailed in today's foreign exchange market, and dollar-yen fell back into the ¥157 range. U.S. September producer prices, released earlier, exceeded expectations, but the reaction was limited despite the data supporting expectations of a Federal Reserve rate hike.
Following the previous day's U.S. CPI-driven moves, the dollar briefly reached the upper end of its range but gave up almost all of its gains, while dollar-yen fell after failing to hold the ¥158 range's midpoint. Upside was limited when the pair tested the 200-day moving average.
The market is focused on the weakness of inflationary pressure reflected in the details of the PPI, and some observers have pointed out that the core index remains subdued after excluding the impact of gasoline prices. Expectations of additional rate hikes therefore remain, but concerns are also emerging about the impact on the economy.
Expectations for higher U.S. interest rates alone are unlikely to sustain dollar buying, and some believe that the yen could reach a turning point if expectations for further gains in AI-related stocks in the equity market continue to falter. Options expiring during New York hours were concentrated around ¥158.