The yen has weakened against the dollar into the mid-¥155 range in the Japanese market, with dollar buying and yen selling prevailing against a backdrop of rising oil prices and U.S. long-term yields. Markets are in a wait-and-see mood ahead of monetary policy decisions in Japan and the United States.
In Japan's markets on the 16th, the yen weakened against the dollar and traded in the mid-¥155 range. Against a backdrop of further gains in oil prices and rising U.S. long-term yields in overseas markets, moves toward yen depreciation prevailed, while super-long-term yields also rose in the bond market. In the equity market, the Tokyo Stock Price Index, or TOPIX, rose at times. With monetary policy decisions in Japan and the United States approaching, a wait-and-see mood has spread across the markets.
Long-term and super-long-term yields rose in the bond market, with concerns about fiscal expansion and possible selling by institutional investors cited as factors. Market participants expect position adjustments to continue ahead of the FOMC announcement, while the outlook for the next rate hike and whether forward guidance is provided could have an impact.
Kariya (苅谷), a strategist at The Minato Bank, said that rising U.S. long-term yields and reports of increased defense spending would support the flow of dollar buying and yen selling. Kariya said dollar demand could emerge in Tokyo daytime trading as the dollar returns to the ¥155 range for the first time in about two weeks. Some market participants also said dollar selling by exporters could cap the dollar's upside during the day.
Market participants also cautioned that a dollar-negative reaction could result from factors such as the surprise of no rate hike at the FOMC or a lack of forward guidance. Ahead of developments in U.S. long-term yields and the Bank of Japan's policy meeting, the upward trend in super-long-term yields in the bond market is expected to continue.