After dollar-yen hit a low of ¥157.70 at the end of last week, it rose to ¥158.34 before 2:00. The US 10-year Treasury yield temporarily fell to the 5.06% range before rebounding slightly. Upside surprises in US CPI and PPI data, developments in expectations for Fed rate cuts, and the expansion of protests in France are cited as sources of market volatility.
In overseas markets at the end of last week, dollar-yen moved from an intraday low of ¥157.70 to a daily high of ¥158.34, before being pushed back as long-term US yields temporarily fell to the 5.06% range. Euro-dollar remained quiet, generally moving from the mid-¥1.12 range toward the lower end.
Dollar-yen is also expected to remain range-bound in the Tokyo market this week, but the risk that multiple factors could trigger a sharp change is being watched closely. US September CPI and PPI exceeded market expectations, and movements in long-term US yields are weighing on dollar-yen's upside.
While the probability of a December rate hike has risen, Fed officials appear to believe that inflation is not worsening significantly. The future path will depend on developments in energy prices. In addition, reports that protests in France have expanded to at least 1,200 arrests and an estimated 550,000 participants could affect market flows and trends in yen weakness and dollar buying.
Currently, the monetary authorities of Japan and the US are taking a negative stance toward yen weakness and reflationary policies. Whether dollar-yen will move beyond its range is expected to depend on upcoming indicators. Against a backdrop of fiscal and political uncertainty in France, the focus is on how expanding euro selling and yen buying will interact with dollar buying.