The yen fell to the low ¥158 range in the Tokyo market early on the 7th. The decline was weighed down by easing concerns over French fiscal conditions and receding expectations for an early BOJ rate hike.
In the market early on the 7th, the yen traded at ¥158.22–24 per dollar and ¥178.09–13 per euro, respectively, with the yen weaker and the euro stronger than the previous day. French long-term yields fell in the European government bond market, supporting euro buying, while the yen was generally weak.
The yen was weighed down by receding expectations for an early BOJ rate hike. While Governor Kazuo Ueda (植田 和男) indicated that the pace of rate hikes would be considered, his remarks did not suggest consecutive rate hikes, and market expectations for a rate hike ahead of the 29th–30th meeting were broadly seen as having faded.
US factors also supported the weaker yen. Reports that there had been no review of the GPIF’s basic portfolio, together with continued awareness of the resilience of the economy as the ISM services index remained above 50 despite declining from the previous month, kept US long-term yields at elevated levels. This prompted selling based on the interest-rate differential between Japan and the US.
In Europe, easing concerns over French fiscal conditions supported the euro, and attention is expected to shift to the BOJ meeting and US economic data. A view that the yen will remain capped as long as the Japan-US interest-rate differential is wide has become widespread in the market.