The yen traded in the low ¥159 range per dollar in the Tokyo market on the morning of the 27th. Yen selling prevailed after the rise in the US PCE price index exceeded market expectations, heightening concerns over additional rate hikes by the FRB.
In the Tokyo foreign exchange market on the morning of the 27th, the yen traded in the low ¥159 range per dollar, with the range at around ¥159.18 to ¥159.19 as of 10:00 a.m. In the previous day’s New York market, the yen had temporarily fallen to ¥159.28-¥159.38.
After the rise in the US personal consumption expenditures (PCE) price index exceeded market expectations, concerns over additional rate hikes by the FRB grew and US long-term yields rose. Trading to sell the yen and buy the dollar, based on expectations of a widening Japan-US interest rate differential, spread to the Tokyo market.
The PCE data suggested that inflationary pressure remained persistent, reviving expectations that the FRB would maintain its monetary tightening stance for an extended period. The data is being watched by the market as a factor supporting dollar buying.
Meanwhile, active position building was limited in the Tokyo market, and a wait-and-see stance prevailed as investors assessed the next market catalysts. The euro was nearly flat against the dollar and remained at levels indicating a weaker yen and stronger euro against the yen. Attention will now focus on US economic data, comments from FRB officials and further policy information from the Bank of Japan.