The yen rose to the low ¥158 range against the dollar on the morning of the 2nd in Tokyo. The retreat in expectations for a Fed rate hike and stronger-than-expected September CPI in Tokyo's 23 wards were cited as factors behind the move.
In the Tokyo foreign exchange market on the morning of the 2nd, the yen traded in the low ¥158 range to the dollar. At 10:00, the rate was ¥158.14–158.15 to the dollar, representing a 23-sen yen gain against the dollar from the previous day. The yen also strengthened against the euro, trading at ¥177.65–177.67 to the euro.
Yen buying and dollar selling led trading as expectations for a Fed rate hike receded, prompting market participants to focus on a narrowing Japan-US interest-rate differential. Market participants said that the Fed's policy outlook and expectations for the future course of US interest rates influenced movements in the yen.
The September Tokyo 23-ward consumer price index, released by the Ministry of Internal Affairs and Communications, showed stronger-than-expected results, strengthening expectations that the Bank of Japan may move to raise interest rates at an early stage. Many market participants believe this supported yen buying.
The yen had traded weaker against the dollar the previous day, but was bought back during the morning of the 2nd. Some observers said that the retreat in Fed rate-hike expectations and the strength of the inflation data marked a turning point for the market.