In Tokyo trading on the 20th, the yen fell to the lower ¥158 range per dollar. The move was driven by the Japan-US interest-rate differential and higher oil prices, but the 200-day moving average was seen as an upper barrier, leaving the US housing data due tonight and the BOJ meeting as the key focuses.
The yen fell in the Tokyo foreign exchange market, with dollar-yen at ¥158.44-45 at noon. The yen weakened by 28 sen against the previous day as higher oil prices amid escalating tensions in the Middle East and rising US long-term interest rates prompted dollar buying. At the same time, the 200-day moving average was seen as resistance in the upper ¥158 range, and gains remained limited. Some market participants believe dollar buying could ease depending on the US housing data due tonight.
Against this backdrop, higher oil prices and the rise in the US 10-year Treasury yield drove dollar buying. WTI rose as high as $104.18, while the 10-year Treasury yield was 5.14%, near its closing level. FedWatch showed a higher probability of a rate hike by the December FOMC, and the Japan-US interest-rate differential made the market prone to yen selling and dollar buying.
The dollar strengthened to around ¥158.60 in the morning but fell back to the lower ¥158 range in the afternoon. The 200-day moving average was around ¥158.57, while the 14-day high of ¥158.95 was seen as an upper target, and concerns over intervention at ¥159 and above remained strong. Some market participants believe a weak US housing indicator would cap the dollar's upside. Comments by the finance minister and speculation concerning Japanese policy also weighed on the market.
In the bond market, demand was strong at the 20-year government bond auction, with a bid-to-cover ratio of 5.844 times, bids of ¥3.139 trillion and accepted bids of ¥537.1 billion. In the equity market, the Nikkei 225 fell for a second straight session, down ¥841.28 from the previous day at ¥64,075.42, while TOPIX fell 58.27 points to 4009.21. The US September housing starts data and pending home sales index due tonight are the market's key focuses, and the dollar's upward momentum could slow depending on the housing data.