Ahead of BOJ Governor Ueda’s (植田) speech, USD/JPY intensified its battle around ¥158, with volatile trading continuing under the influence of US interest rate movements and developments in Europe. The focus will be on clues regarding the pace of future rate hikes and price trends.
In the Tokyo market, USD/JPY focused on the battle around ¥158 ahead of BOJ Governor Ueda’s (植田) speech in the afternoon. In overseas trading the previous day, the pair rose temporarily to around ¥158.30, but lost momentum when the rise in long-term US yields paused, ending trading in the upper ¥157 range.
During the day on the 5th, reports that no discussion of a review of the basic portfolio had taken place at GPIF’s September meeting reduced expectations for domestic funds to buy back yen. The US 10-year Treasury yield rose to its highest level in around 24 years, prompting dollar buying against the backdrop of a widening US-Japan interest rate differential.
The dollar was bought at times on concerns over European fiscal conditions and European political developments, while the dollar index rose. There were also periods when falling crude oil prices restrained the yen’s depreciation. In Prime Minister Takaichi Sanae’s (高市早苗) policy speech, the government’s approach to domestic fiscal management was outlined.
Depending on the content of Governor Ueda’s speech, the focus is whether the yen will be bought back or USD/JPY will make another attempt at the ¥158 level. Attention will also remain on US data and comments from Federal Reserve officials, with USD/JPY expected to trade in a range of approximately ¥157.2 to ¥158.4.