As dollar-yen approached ¥160, stronger-than-expected US CPI and comments by Fed officials raised rate-hike expectations, while intervention concerns capped the upside.
In New York trading on the 11th, dollar-yen temporarily rose to ¥159.94, approaching the ¥160 milestone. In addition to October US CPI exceeding market expectations, Fed Governor Christopher Waller (クリストファー・ウォラー) and Boston Fed President Susan Collins (スーザン・コリンズ) were reported to have suggested the possibility of additional rate hikes amid concerns over high inflation. The widening US-Japan interest-rate differential encouraged dollar buying.
However, as the exchange rate approached the ¥160 level, the upside during the day was expected to remain capped by profit-taking and strong concern over intervention by the Japanese government and the Bank of Japan. The Tokyo market was expected to see intense crosscurrents between expectations for additional US rate hikes and intervention concerns.
Market participants were closely watching the stance of the Japanese authorities. Finance Minister Katsunobu Katayama (片山財務相) said the authorities would respond to disorderly market moves, suggesting action based on the US-Japan memorandum. Whether the framework of the US-Japan currency alliance remains in place will be assessed based on future statements by the authorities and whether intervention takes place.
Today's agenda centers on the release of the October corporate goods price index and import price index. The corporate goods price index is expected to rise 0.3% month on month and 6.5% year on year. Remarks by Bank of Japan Policy Board Member Asada (浅田審議委員) will also be closely watched and are expected to be viewed primarily as cautious on rate hikes.