In the foreign exchange market on the 8th, the yen reached highs in the low ¥154 range against the dollar, and buying continued as market participants explored further room for yen appreciation amid expectations of a Bank of Japan rate hike. Bonds are expected to attract buying, while a five-year JGB auction is scheduled.
From the evening of the 8th, amid thin trading due to a US holiday, the yen briefly reached ¥154.06, its strongest level since February. Buying accelerated after the yen fell below ¥155, triggering stop-loss orders, as expectations of a Bank of Japan rate hike strengthened and market participants sought further room for yen appreciation.
Hasegawa Kyugo (長谷川久悟), a market economist at Mizuho Bank, described the yen's sharp rise as a surprise but noted that the market could become range-bound ahead of next week's central-bank week.
Okumura Jin (奥村任), chief interest-rate strategist at Nomura Securities, said views were spreading that the market had reached a turning point after dollar-yen fell below ¥155. He expects the pace of yen appreciation to slow ahead of the US CPI release.
In the bond market, the benchmark September contract rose in overnight futures trading. An auction of five-year interest-bearing Japanese government bonds is scheduled, with planned issuance of around ¥2.5 trillion. Okumura expects the bond market to remain firm and believes the auction will attract demand and be absorbed without difficulty.