Tokyo Forex: Dollar Firm in Mid-157 Yen Range; Yen Selling Favored on U.S. Stock Gains, but Upside Limited Ahead of FOMC, BOJ — BigGo Finance

In the Tokyo foreign exchange market on the morning of the 27th, the dollar-yen rate showed a slightly firm tone. After falling to 157.43 yen per dollar in the morning, it rose to 157.60 yen. Following the previous day’s rebound in U.S. stocks, investors’ risk-aversion stance eased, and dollar buying and yen selling became dominant. However, ahead of the U.S. Federal Open Market Committee (FOMC) meeting and the Bank of Japan’s monetary policy meeting scheduled later this week, moves to aggressively chase higher levels were limited, and the pair is currently trading in the 157.50 yen range.

Trading ranges were 157.43 yen to 157.60 yen for dollar-yen, 175.93 yen to 176.07 yen for euro-yen, and $1.1171 to $1.1176 for euro-dollar.

In the Tokyo market on the previous day, Monday the 26th, dollar-yen traded mainly in the lower 157 yen range, lacking decisive trading cues. As of 5 p.m., it stood at 157.13-14 yen, 18 sen stronger for the dollar and weaker for the yen compared with the same time at the end of the prior week (156.95-96 yen). In Tokyo trading at the start of the week, buying by Japanese importers and others swelled toward the fixing, pushing the pair up to around 157.20 yen, but it later fell back to the 156.60 yen range under pressure from lower crude oil prices and declining U.S. long-term interest rates. In the afternoon, it was bought back to around 157.20 yen on rising U.S. long-term rates.

Among market participants, views emerged that risk-averse moves prompted by unstable stock prices were capping the upside, while persistently high crude oil prices were supporting the downside. Some also said it was difficult to establish direction ahead of earnings announcements by AI and semiconductor-related companies and the FOMC. The euro rose against the yen, standing at 176.07-08 yen per euro as of 5 p.m. (compared with 175.77-79 yen at the same time at the end of the prior week).

Note: Indicative quotes as of 5 p.m. on the 26th, as reported by Jiji Press.

The focus this week is monetary policy. The FOMC is scheduled in the United States, and the Bank of Japan will also hold a monetary policy meeting. Among foreign exchange brokers, some said, “With the meetings at which the Federal Reserve and the Bank of Japan decide monetary policy scheduled this week, there is also a wait-and-see mood.” The stance of wanting to gauge the direction of monetary policy is strong, and the market is prone to staying within a narrow range.

The dollar-yen rate has been unable to break out of its range between the upper 156 yen level and the lower 157 yen level. In overseas markets at the end of the prior week, the pair fell to the 156.50 yen range during European hours, then recovered to around 157 yen, and in the early part of U.S. hours it fell to around 156.30 yen amid declines in major stock indexes. In the middle of the session, it rose to around 157.10 yen on higher crude oil prices and rising long-term interest rates, but in the latter part it struggled around the 156.80 yen level under selling on rallies.

In addition to overseas market trends, demand-based buying by Japanese importers and position adjustments by speculative players have been intermingling, and directionless trading continues. Market participants’ attention is focused on the post-FOMC statement, the details of the Bank of Japan’s policy decision, and earnings announcements by AI and semiconductor-related companies, and the market could swing sharply depending on these developments.

Foreign exchange market trends affect Japanese industry and households through exporters’ profitability and import prices. A weaker yen leads to higher import costs, while it is a tailwind for exporters. Investors will likely need to assess, along with the direction of monetary policy, how exchange-rate fluctuations affect corporate earnings and prices.