In Tokyo trading after the weekend, the yen briefly fell to the lower ¥158 range. Expectations for a US rate hike revived against the backdrop of strong October US jobs data.
The yen fell in Tokyo foreign exchange trading after the weekend, reaching ¥158.30-¥158.31 to the dollar in the morning. The decline was driven by October US jobs data released the previous week that exceeded market expectations and growing expectations that the US Federal Reserve (FRB) will raise interest rates within the year.
In the afternoon, the yen recovered to ¥157.95-¥157.96 to the dollar, nearly unchanged from the end of the previous week. During the morning decline, the market was mindful of prospects for buying yen and selling dollars by Japanese real-demand participants, and the yen’s losses had narrowed to around ¥158.15 by about 10:30 a.m. In the afternoon, the yen was bought back as long-term US Treasury yields declined.
October US jobs data showed that nonfarm payroll growth significantly exceeded market expectations, while the unemployment rate fell to 4.1%. The resilience of the US labor market came into focus, and yen selling and dollar buying prevailed. Expectations for an additional rate hike within the year had temporarily receded as US stocks fell on concerns about AI regulation, but they recovered on the jobs data.
The market is taking a wait-and-see approach to the release of the CPI, the next key inflation indicator. Reports suggest that markets could become more volatile depending on the CPI released on the 10th, while concerns about intervention by the government and the Bank of Japan could cap gains.