Dollar-yen is expected to test higher levels against a backdrop of rising US long-term Treasury yields. The market will assess the direction of trading following the release of US initial jobless claims and the September ISM manufacturing index.
In today's New York market, dollar-yen is expected to test higher levels against a backdrop of rising US long-term Treasury yields, with its subsequent direction likely to be determined by the release of US economic data. Attention will also remain focused on headlines, including developments in negotiations between the US and Iran.
Following remarks by New York Fed President Williams and the August PCE deflator, FedWatch puts the probability of an October FOMC rate hike at approximately 34% and the probability of no change at approximately 66%. As a result, market reactions are expected to diverge depending on the employment and inflation data.
The release today of September US initial jobless claims and continuing claims is expected to prompt investors to assess employment conditions ahead of the September employment report. As a leading indicator, corporate job cuts totaled 43,281 in September, down from 52,881 in August.
The September US ISM manufacturing index is forecast at 55.0, an improvement from 54.6 in August. However, attention will also be paid to movements in the prices and employment subindices, with the key question being whether the data will support dollar buying.
If dollar-yen is expected to break above the high near ¥159.04, concern over dollar-selling and yen-buying intervention by the Bank of Japan may increase. Fed officials are also scheduled to speak today, and attention will continue to focus on any comments regarding additional rate hikes this year.