Risk-off yen buying returned to the foreign exchange market on the afternoon of 22 October. Against the backdrop of the Nikkei 225’s decline, USD/JPY temporarily fell into the ¥156 range.
In the foreign exchange market on Thursday, 22 October, the Nikkei 225 continued to decline, while falls in the South Korean and Taiwanese markets also spread uncertainty across equities. Against this backdrop, uncertainty surrounding AI investment intensified, prompting stronger yen-buying activity, and reports indicated that risk-off yen buying had returned. The Nikkei 225 fell below the ¥63,000 range, and the decline in share prices became a factor behind yen appreciation and dollar depreciation. As a result, USD/JPY temporarily fell to around ¥156.69.
Among US economic indicators, initial jobless claims came in at 194,000, below market expectations and at their lowest level in approximately three months. The four-week moving average also fell to a level last seen in September 2022, with the direction of the US economy affecting the foreign exchange market.
In long-term interest rates, the US 10-year Treasury yield fell below 5.0% and extended its decline. In addition to uncertainty surrounding AI investment, concerns over tensions in the Middle East and Europe’s fiscal and political conditions were said to have prompted investors to seek the safety of safe-haven assets.
Regarding today’s USD/JPY outlook, the view is that share-price movements will be the main driver, and that yen appreciation could accelerate if stock prices continue to decline. The lower boundary of the daily Ichimoku cloud has been cited as a nearby downside target.