The NY yen rebounded in New York trading on 2 November, with dollar-yen moving just below ¥158. Dollar buying resumed after the U.S. ISM manufacturing index came in above market expectations.
In New York trading on 2 November, the yen initially weakened against the dollar before the NY yen rebounded. Dollar-yen briefly fell to ¥157.63, but the U.S. ISM manufacturing index came in above market expectations, rising to 55.5. This revived dollar buying and sent the pair back up to ¥157.93. Trading was subdued ahead of the U.S. midterm elections, while expectations for U.S.-Iran diplomatic negotiations and a decline in long-term U.S. interest rates supported the yen on the downside.
Movements in long-term U.S. interest rates also affect dollar-yen. On 2 November, the U.S. 10-year Treasury yield was 4.901%, Japan's 10-year government bond yield was 2.767%, and the Japan-U.S. interest rate differential was approximately 2.13 points, narrowing from the previous day. This at times restrained the momentum of the dollar's rise, but trading continued to test the possibility of a break above ¥158. In Tokyo trading, dollar-yen moved from the ¥157.90 range to the ¥157.78 range, and long-term U.S. interest rates will remain a focus.
Technically, ¥158 was seen as an important upside resistance level. Upside targets were around ¥158.20 and ¥158.33–¥158.36, while the 200-day moving average on the daily chart was around ¥158.63. On the downside, around ¥157.60 was viewed as a short-term support level, while the ¥157.40–¥157.45 area was also considered a level requiring close attention.
Key factors to watch going forward include the outcome of the U.S. midterm elections, U.S. JOLTS job openings, the ADP employment report, the ISM services index, the employment report, expectations for additional Bank of Japan rate hikes, and developments in the U.S.-Iran situation. Whether dollar-yen can hold above ¥158 will be a short-term focus, and concern over foreign-exchange intervention may also increase.