In today’s New York FX market, dollar-yen is expected to test the downside amid speculation over the size of rate hikes by the Federal Reserve and the Bank of Japan. Moves in long-term U.S. interest rates and the results of the 3-year Treasury auction, as well as the details of any fiscal consolidation announcement, are expected to affect U.S. Treasury markets.
Against the backdrop of speculation over Japanese and U.S. monetary policy today, dollar-yen is expected to test the downside in the New York market. Key indicators include movements in the U.S. 10-year Treasury yield and the results of the 3-year Treasury auction.
A fiscal consolidation announcement could prompt selling of U.S. Treasuries, and views have emerged that caution will also be needed over the risk of a downgrade.
Following last week’s August employment report, the probability of a 0.25% rate hike at next week’s FOMC meeting is seen at approximately 60%.
Oil remains firm amid uncertainty over the situation in the Middle East, but reports indicate that dollar selling and yen buying currently predominate. The outlook also refers to expectations for a rate hike at the Bank of Japan’s next policy meeting, moves by GPIF and NBIM, and the possibility of rebalancing.
The downside guide for dollar-yen is ¥152.10 and the upside guide is ¥155.30, while the calculated level of ¥151.63 is cited as a technical floor.