With long-term US Treasury yields remaining elevated, dollar-yen is struggling to rise. Strong concern about coordinated intervention by Japan and the US is weighing on the upside, and the pair is expected to remain under pressure.
In the European and US foreign exchange markets on the 28th, dollar-yen struggled to rise, while euro-dollar edged lower. Long-term yields are expected to remain elevated, and there may be periods in which dollar buying provides the initial impetus, but concern about coordinated intervention by Japan and the US weighed heavily as a factor restraining dollar weakness.
Uncertainty over the reopening of the Strait of Hormuz and developments in crude oil prices were the market's focus, while a decline in oil prices was reported at the end of the previous week. At the same time, the Federal Reserve's hawkish stance on financial conditions raised expectations that long-term yields would remain elevated, at times supporting the dollar.
In Asian markets, there were periods when the US president's efforts to restrain yen depreciation reduced yen buying, but the outlook is that developments in the Middle East and long-term US Treasury yields will be key going forward. If long-term yields remain elevated, they could affect the dollar's performance and encourage dollar buying. Meanwhile, concern about coordinated intervention by Japan and the US continues to leave pressure to sell dollars and buy yen.
A large number of employment-related statistics are scheduled for release as potential catalysts for overseas markets, and some believe that a sharp rise will be difficult depending on the data. The September US Dallas Fed Manufacturing Index is due to be released, with a forecast of 7.3 versus 11.6 previously.