Dollar-yen has undergone a correction following this week’s rise and is trading in a range of ¥157.95 to ¥158.95. The move has been driven by tensions in the Middle East, higher oil prices and rising U.S. Treasury yields.
Dollar-yen rose this week amid a favorable market tone, as yen selling driven by the Japan-U.S. interest rate differential gathered pace. However, after briefly reaching a high in the ¥158 range today, it has since fallen back to around ¥157.95. Higher oil prices and rising U.S. Treasury yields are supporting dollar buying.
At the same time, concerns over an expansion in the Japan-U.S. interest rate differential and comments regarding the yen’s undervaluation have unsettled the market. Comments by Finance Minister Katayama (片山) warning against yen depreciation and reports on remarks by Prime Minister Takaichi (高市) have been cited as factors behind volatility in the yen market. These factors may be intensifying the market’s corrective phase.
Comments related to the United Nations General Assembly and international conferences are expected to continue, with events warranting caution concentrated in the foreign exchange market. The focus in overseas markets will be whether yen buying and dollar selling continue.