Dollar buying has resumed following the US August employment report, and the battle around ¥155 remains a key focus for dollar-yen trading. Trading is expected to continue searching for direction ahead of the FOMC meeting and the Bank of Japan's policy meeting in mid-month.
In New York foreign exchange trading on the 4th, dollar-yen rose to ¥156.75 before falling to ¥155.36 and closing at ¥156.23. Nonfarm payroll growth in the US August employment report exceeded expectations and expanded, reviving expectations of rate hikes and leaving dollar buying in the ascendancy. From the yen's lows, expectations of a Bank of Japan rate hike and caution over intervention to correct yen depreciation remained in place, strengthening yen buying as well.
The lows of ¥155.22 following the coordinated intervention at the end of July and ¥155.03 during the intervention around Japan's Golden Week holidays in May are increasingly being watched as downside benchmarks. Upside gains are expected to remain limited against the backdrop of expectations for early and consecutive Bank of Japan rate hikes and a GPIF asset-allocation review.