Risk aversion intensified against a backdrop of US political uncertainty, and USD/JPY fell in morning trading. The reaction to the US October employment report is expected to be limited.
USD/JPY fell approximately 0.5% on a closing-price basis yesterday. Following the US midterm election results, the Democrats' landslide victory raised expectations of tighter AI regulation and delays to data-center construction, sending US stocks lower, particularly AI-related shares. Risk-averse yen buying intensified, pushing the rate down to around ¥157.53 at one point. Speculation about Defense Secretary Hegseth's replacement and rumors of Secretary of State Rubio's resignation also contributed to yen strength.
With the release of the US October employment report and expectations for a Fed rate hike in December in focus today, attention is also turning to growth in average hourly earnings. If the increase exceeds market expectations, rising inflationary pressure could come into focus, although the market reaction to the employment report is likely to be temporary.
US political uncertainty continues, and trading is expected to track movements in US share prices and long-term Treasury yields. Today's USD/JPY range is expected to be ¥156.900 to ¥158.500.