The yen briefly fell to a one-and-a-half-month low in Tokyo trading on the 11th, declining to the upper ¥158 range. Stronger expectations for a US rate hike and rising long-term yields weighed on the currency.
The yen fell sharply in Tokyo foreign exchange trading on the 11th, reaching around ¥158.96 shortly after 10 a.m. and standing at ¥158.87–¥158.89 at 5 p.m., its lowest level since late September. Dollar buying prevailed, while against the euro the yen strengthened and the euro weakened.
The main drivers of yen selling and dollar buying were stronger expectations for a US rate hike in December amid inflation concerns, which pushed up US long-term yields, and trading based on awareness of a widening US-Japan interest-rate differential. Some market participants said actual dollar demand from domestic importers also pushed the yen lower.
Dollar-yen consolidated in the afternoon. Although the Nikkei Average rose, the increase in the yield on the newly issued 10-year JGB weighed on the yen in the afternoon, sending it down to around ¥158.71. Selling eased near ¥158.70, the level of the 200-day moving average, and the yen recovered to ¥158.87 at 5 p.m.
Euro-dollar traded in a narrow range at $1.1155–$1.1170, slightly lower. Euro-yen lacked direction in the lower ¥177 range, while dollar strength was pronounced. Future movements in the yen are expected to depend on US policy developments and changes in the US-Japan interest-rate differential.