Signs of yen appreciation have emerged in the foreign exchange market. As the November U.S. midterm elections and spreading political instability in France fuel expectations for a weaker dollar and euro, the yen is expected to be bought relatively strongly.
The foreign exchange market is reported to be showing signs of yen appreciation, with views that the dollar is likely to weaken depending on the outcome of the U.S. midterm elections. Against a backdrop of falling share prices and growing fiscal strain, the yen is seen as benefiting from a windfall as investors buy it relatively strongly. Moves concerning the safety of holdings are cited as a factor supporting yen appreciation.
As a medium-term factor, a domestic bank dealer is quoted as saying that the dollar is likely to face selling pressure regardless of the outcome of the November U.S. midterm elections. Some market participants say dollar selling will accelerate if the Democratic Party gains the upper hand, while others point to the possibility that a strong Republican performance could increase downward pressure on share prices.
Meanwhile, the euro is expected to remain on a downward trend amid spreading political instability originating in France. This is viewed as a factor that, alongside a weaker dollar, will support the yen's relative strength. Since October, levels around ¥156 to the dollar have been mentioned, and market participants are advised to monitor developments in the foreign exchange market closely.