In the Tokyo foreign exchange market, USD/JPY was stuck around ¥158, with the pair lacking a clear direction ahead of remarks by the BOJ governor. Reports on a review of GPIF’s portfolio and movements in US economic indicators influenced the market.
In the Tokyo foreign exchange market on the morning of the 6th, the yen fell against the dollar, with USD/JPY at ¥158.01–¥158.03 at noon, a 36-sen weaker-yen, stronger-dollar level from 5 p.m. the previous day. The pair traded within a narrow range in the morning and lacked a clear direction ahead of remarks by BOJ Governor Kazuo Ueda (植田 和男).
The biggest factor prompting yen selling was a report on a review of GPIF’s asset allocation. Bloomberg reported that no review report on the basic portfolio had been presented at the September management committee meeting. Views spread in the market that progress on the review would be delayed, and yen selling and dollar buying prevailed.
Higher US interest rates also weighed on the yen. Although the ISM September services business conditions index was 54.9, slightly below market expectations, its level above 50 indicated underlying economic strength. US long-term interest rates rose as the US-Japan interest-rate differential came into focus, prompting yen selling and dollar buying.
In overseas trading the previous day, USD/JPY rebounded to around ¥158 as selling during European hours was unwound, and during US hours it briefly extended gains to nearly ¥158.30. In the latter part of the session, however, it fell back to the ¥157.80 area as the rise in interest rates paused. It remained at roughly the same level in early Tokyo trading.
Market participants expressed the view that the scope for market activity following Governor Ueda’s remarks would be limited, and the market is expected to continue watching developments at GPIF and the impact of US policy. The euro fell against the yen, although there were instances in which euro buying spread to the yen market.