With the market awaiting month-start factors and the US employment report, dollar-yen is expected to remain in a range from the upper ¥156s to the upper ¥157s. The prevailing view is that the impact of the PCE will be limited.
In the foreign exchange market on 1 October, dollar-yen is expected to lack direction as the market awaits month-start and quarter-start flows and the release of key US economic data. The US August PCE price index came in below market expectations the previous day, but its impact on the market was limited because the result was attributed to a revision in the estimation method. Market attention is focused on the US September employment report due on 2 October, and range-bound trading between the upper ¥156s and the upper ¥157s is likely to continue.
The release of the BOJ Tankan and speculation over monetary policy are also key factors for the day. The business conditions DI is expected to be +25 for large manufacturers and +36 for non-manufacturers, while capital investment plans are expected at +12.3%. The BOJ's Summary of Opinions from its September monetary policy meeting will also be released, drawing attention to developments in expectations for consecutive BOJ rate hikes.
In the US, initial jobless claims will be released at 21:30 and the September ISM Manufacturing PMI at 23:00 on the same day. The market expects the ISM index to be 55.0, while ADP national employment, released the previous day, was solid and exceeded market expectations. Federal Reserve officials are also scheduled to speak, with attention focused on the future course of rate-hike pricing.
Market participants are watching dollar-yen's movements against the backdrop of flows specific to the start of the month and quarter. The yen could move sharply depending on the Tankan and the content of the monetary policy meeting, while position adjustments are expected ahead of the employment report.