In the Tokyo foreign exchange market on the 12th, dollar-yen traded firmly, centered in the low-¥158 range. The decline in dollar selling temporarily subsided against a backdrop of recovering crude oil futures and a halt in the decline of US long-term yields.
In morning trading, dollar selling led at the outset, with the price of WTI crude oil futures in after-hours trading falling below $90 per barrel to as low as $89.61. Crude oil prices subsequently recovered to the $90 range. After dollar-yen fell to ¥158.08, it moved back up to the ¥158.20 range. Dollar-yen stood at ¥158.26 at noon, about 5 sen below the New York market close of ¥158.31.
The morning trading range for dollar-yen was ¥158.07-¥158.40. Dollar selling prevailed as the 10-year US Treasury yield fell to the 5.24% range and crude oil prices remained soft. Dollar selling then paused on views that long-term yields would remain at high levels, limiting the downside. Euro-yen traded around ¥177.36, while euro-dollar was around $1.1207.
Meanwhile, concerns over France’s fiscal position and deteriorating political situation prompted risk aversion, and pressure to buy the yen was also evident. Cross-yen pairs were capped on the upside, limiting euro-yen’s rebound. Market participants continued to hold strong views that the US monetary policy stance would keep long-term yields at high levels, while movements in crude oil prices continued to determine the short-term direction of dollar-yen. Major currencies moved within narrow ranges as thin trading continued with the Tokyo market closed.
Key points to watch going forward include US long-term yields and crude oil futures. Whether crude oil prices can remain stably in the $90 range will be a factor in determining support for dollar-yen on the downside, while reports concerning France’s political and fiscal situation could prompt risk-averse yen buying. The overall direction of the yen, including cross-yen pairs, will continue to require close monitoring.