During the week from the 28th, the dollar-yen rate fluctuated sharply between the mid-¥156s and the mid-¥158s against a backdrop of statements from Japanese and U.S. officials warning against yen depreciation and risks in the Middle East. The Fed's and Bank of Japan's interest-rate outlooks, higher oil prices and price trends caused the market to swing.
At the start of the week, statements from Japanese and U.S. officials warning against yen depreciation pushed the dollar-yen rate from the low ¥157s to around ¥157.86 temporarily. Thereafter, efforts to restrain follow-on buying at the highs and a sense of caution coexisted, and although the euro-yen and pound-yen rates reached highs, further gains were limited.
In the London market, broad-based dollar strength continued under the influence of Bank of Japan comments and geopolitical risks. The dollar-yen rate fell to ¥156.50 before recovering to the ¥157 range. Higher oil prices and rising long-term U.S. interest rates supported the dollar.
On the 29th, developments in Australian monetary policy sent the Australian dollar sharply lower. The dollar's underlying strength continued, the euro-dollar rate extended its decline, and expectations for long-term dollar strength remained firm against the backdrop of the Japan-U.S. interest-rate differential.
On the 1st, the yen market began to move as concerns over yen depreciation receded, with the dollar-yen rate rising from the ¥157.30 range to around ¥158.40. Expectations for an additional Bank of Japan rate hike strengthened, while caution over intervention remained.
On the 2nd, yen-buying pressure emerged at times against the backdrop of a rise in core CPI in Tokyo's 23 wards. However, a wait-and-see mood ahead of the U.S. employment report spread into the night, and the dollar recovered to the mid-¥158s.