During the week of 2–6 November, market sentiment swung sharply against the backdrop of developments in the Middle East and the US midterm elections, with USD/JPY fluctuating from the upper ¥157s toward the lower ¥158s. Daily movements alternated between risk-on and risk-off sentiment, driven by political events and movements in crude oil prices.
At the start of the week, market sentiment was influenced by developments in the Middle East and the US midterm elections. USD/JPY rose to around ¥157.99, but selling on rallies emerged near the ¥158 threshold, pushing it back below ¥157.70. Dollar selling led in the London market, and the dollar weakened against European currencies, but moves in European markets again pared the dollar-selling trend, with the pair fluctuating from the mid-¥157s to around ¥158 toward the close. Dollar weakness paused in the NYSE market, and there were periods when cross-yen rates moved toward a weaker yen.
On 3 November, the Tokyo market was closed and trading was halted. Dollar buying prevailed in the London market, with periods of stronger dollar-buying pressure driven by a rebound in crude oil prices and concerns about inflation. In the NY market, USD/JPY attempted to rise into the upper ¥158s, and moves targeting a break above around ¥158.60 were observed. Dollar buying prevailed amid European participation and hawkish remarks from senior central bank officials, while the euro and pound weakened against the dollar.
On 4 November, the Nikkei average plunged on concerns about curbs on AI investment following reports that the Democratic Party was gaining the upper hand. USD/JPY fell sharply from ¥158.74 in the morning to ¥157.41, but recovered into the ¥158 range again in the afternoon. Dollar buying emerged in the London market against the backdrop of lower crude oil prices and falling interest rates, while range-bound trading continued in the NY market as participants assessed the US midterm election results. From the middle of the session onward, factors including expectations of a BOJ rate hike also emerged, limiting USD/JPY's upside.
On 5–6 November, USD/JPY remained range-bound in the upper ¥157s as risk-off moves intensified in European and US markets. On 6 November, trading was cautious ahead of the US employment report, but USD/JPY rose again into the mid-¥158s at times, partly because solid employment data were ultimately released in the New York market. European currencies remained weak against the dollar and yen, while rebounds in cross-yen rates remained sluggish.