USD/JPY fluctuated around the ¥156 level as of 3 p.m., with some market participants saying they wanted to assess the direction of monetary policy in Japan and the US. Trading volumes are being restrained by a US market holiday this week, while the release of CPI data is also pending.
USD/JPY was trading around ¥155.79–¥155.83 as of 3 p.m., moving back and forth around the ¥156 level. Expectations are growing that investors will seek to assess the direction of monetary policy in Japan and the US, while trading volumes are limited by a US market holiday this week.
Market participants said the release of the US consumer price index (CPI) due at the weekend could trigger dollar selling and yen buying. Some expect the yen to strengthen, particularly if the CPI data are weak.
Amid a range of factors, including speculation over the pace of Bank of Japan rate hikes, concern over GPIF's review of its asset allocation, the government's stance on correcting yen depreciation and the possibility of coordinated intervention by Japan and the US, market attention is turning to the progress of yen buying as the rationale for selling the currency weakens.