In the New York market on 16 October, dollar-yen closed at ¥157.99 after forming a floor in the mid-¥157 range, with US long-term interest rates and higher crude oil prices driving the market. Dollar-yen is expected to continue searching for direction on 19 October, with the Bank of Japan's stance and the ¥160 level as the market's main focus.
In the New York foreign exchange market on 16 October, dollar-yen fell to ¥157.70, rebounded to ¥158.34 and then ended trading at ¥157.99. While inflation data showed an acceleration, the possibility of an additional rate hike at the October FOMC receded because Fed Chair Warsh did not signal his policy decision in advance. There were periods when this strengthened dollar-selling pressure.
It was subsequently reported that higher long-term interest rates, linked to rising crude oil prices, caused dollar-selling to recede. On 19 October, the dollar's upside is expected to remain capped as the market continues to search for direction. Elevated NY crude oil futures, against a backdrop of worsening conditions involving Russia, Ukraine and the Middle East, are affecting interest-rate movements.
Technically, the mid-¥158 range is being watched as an upside barrier, while the mid-¥157 range is viewed as a downside guide, according to some market participants. Expectations ahead of the Bank of Japan's next meeting are also a focus, with ¥160 drawing attention as Japan's defensive line and market vigilance over the possibility of intervention increasing.
BOJ Governor Ueda's indication that continued rate hikes would be necessary because an overshoot of underlying inflation above 2% could not be tolerated is being viewed as a factor supporting yen buying, and future policy developments are likely to affect the direction of dollar-yen. US interest-rate trends, the situation in the Middle East and involving Russia, and the Bank of Japan's response remain key market factors.