In the Tokyo market on the 26th, USD/JPY lacked direction around the ¥157 level as investors stayed on the sidelines ahead of the FOMC and BOJ meeting from the 27th to the 30th. Declines in US AI stocks and interest-rate movements created yen buying pressure.
In the Tokyo foreign exchange market on the 26th, USD/JPY traded without a clear direction around ¥157. It rose to around ¥157.21 toward the fixing, but weakened to around ¥156.65 before noon. It also briefly recovered into the ¥157 range in the afternoon against a backdrop of higher oil prices, while investors increasingly stayed on the sidelines ahead of the FOMC on the 27th and 28th and the BOJ meeting on the 29th and 30th.
The focus this week is on officials' comments regarding the timing of the next rate hike, as US and Japanese monetary policy meetings approach at the same time. Statements and press conferences could influence the market, and many market participants believe that movements in AI-related stocks and US long-term interest rates will be key to the yen exchange rate.
The US two-year Treasury yield fell to around 4.68%, while declines in AI and semiconductor stocks prompted a correction in dollar buying and supported dollar weakness and yen strength. The Nikkei average fell for a third straight day, while the South Korean won reached a level near a two-year high against the dollar. The BOJ's Outlook Report and Governor Ueda's press conference are also attracting attention.
Speculative yen-buying positions have continued to build steadily, with net yen buying reaching 69,878 contracts as of the CFTC reporting date. Expectations for a BOJ rate hike in December remain a market factor, but stronger prices have not immediately translated into yen strength.