Although U.S. CPI and PPI at times came in above market expectations last week, the resulting rise in U.S. yields and appreciation of the dollar was limited. Ahead of the 19 October anniversary of Black Monday, USD/JPY is expected to trade in a ¥155–¥159 range this week.
USD/JPY was centered in a narrow range from the mid-¥157s to the upper ¥158s last week, and continued to move narrowly within the ¥157–¥159 range for about a month. Highly watched data, including September CPI released on 14 October and PPI released on 15 October, mostly came in above expectations, temporarily prompting higher yields and a stronger dollar.
The response of U.S. yields and the dollar after the CPI release was limited as views spread that the outlook for long-term interest rates had become uncertain against the backdrop of a sharp decline in share prices. Trends in AI-related stocks and the decline in the SOX Index also drew market attention as localized market factors.
The SOX Index has fallen approximately 10% since the start of October, and concerns about the collapse of an AI bubble were said to have acted as a factor restraining interest rates and dollar appreciation. These moves were compared with the Nasdaq’s performance during the IT bubble, with some interpretations holding that they could also affect the current market phase.
This week’s focus is the direction of long-term interest rates and share prices. As 19 October marks the anniversary of Black Monday, the range for USD/JPY is forecast at ¥155–¥159 on the possibility that a widening decline in share prices could affect the pair.