In overseas markets late last week, dollar-yen moved back from the 156 range to the mid-157 range. With stocks falling on Amazon’s and Intel’s earnings, and concerns over the Middle East rising, trading is expected to remain volatile.
In overseas markets late last week, dollar-yen fell temporarily to the 156 range before recovering to the mid-157 range by the close. The dollar is believed to have come under selling pressure after earnings announcements from Amazon and Intel triggered declines in technology stocks.
Over the weekend, concerns over the Middle East spread against a backdrop of reports that a tanker had caught fire after striking a mine linked to Iran, as well as President Trump’s comments about attacking Iran after the midterm elections. Risk aversion produced intersecting dollar-buying and yen-buying flows, and cross-yen pairs were notably weak.
In addition to developments in the Middle East, important events are scheduled, including the Reserve Bank of Australia’s policy rate announcement, the US midterm elections, the Bank of England meeting, US employment data and the ISM Manufacturing Index. Markets are expected to remain nervous, with concerns likely to spread over sharp short-term volatility.
The euro is likely to be weighed down by dollar-buying and yen-buying flows against a backdrop of developments involving rating agencies and the Middle East, raising the possibility that support around ¥175 for euro-yen will be tested. Against the dollar, pound sterling is expected to remain in a wait-and-see phase ahead of the Bank of England meeting, while pound-yen is expected to face resistance in the low ¥211 range.