The October outlook for dollar/yen sees a strong likelihood that both the U.S. and Japan will forgo rate hikes, with the next move considered more likely in December. The expected range is broadly from around 155 to the mid-160s.
The report reviews September’s movements and background, with many expecting the United States to forgo an additional rate hike in October and considering the possibility of another Bank of Japan rate hike to be low. Although the September FOMC was viewed as relatively hawkish, pricing for an October rate hike has declined following remarks by New York Fed President Williams and the PCE data. Depending on the interaction between U.S. interest-rate trends and Japan’s policy management, dollar/yen is expected to trade in a range from the low 155s to the low 160s.
The report summarizes key October events and the market outlook. The Bank of Japan is considered likely to maintain its policy in October, while expectations of a U.S. rate hike within the year are expected to remain despite a slowing pace of hikes. U.S. CPI and other data are likely to influence market movements, and many expect dollar-yen to remain broadly within a range of 155 to 160, with movement possible in either direction.