In the Tokyo foreign exchange market on the morning of the 26th, the dollar-yen pair retreated to the upper 156 range at 1 dollar = 156 yen. Commercial buying led the way and briefly pushed the pair higher to around 157.20 yen, but after that buying ran its course, and the pair came under pressure from the decline in the Nikkei Stock Average, weaker crude oil prices, and lower U.S. long-term interest rates. At noon, it stood at 156.72-73 yen, 23 sen stronger for the yen (weaker for the dollar) from 156.95-96 yen at 5 p.m. at the end of the previous week.
Overseas markets at the end of last week lacked clear direction. After falling to around 156.50 yen during European hours, the pair recovered to around 157 yen, then retreated to around 156.30 yen early in U.S. hours before climbing back to around 157 yen at mid-session. In late trading, it was capped by selling into rallies and struggled around 156.80 yen. In Tokyo on Monday, the pair firmed to around 157 yen in early trading, then fresh commercial buying emerged after 9 a.m., lifting it to around 157.20 yen ahead of the Tokyo fixing.
After the fixing, however, the flow shifted, and the pair gave up ground in tandem with falling stocks. Market participants noted that the decline in crude oil prices and U.S. long-term interest rates during off-hours trading prompted selling of the dollar-yen pair. In the afternoon, the market is expected to keep a close eye on the Nikkei Stock Average, crude oil prices, and U.S. interest rates, but major Japanese banks and others said direction is likely to remain elusive given the major events of the Japan-U.S. monetary policy decisions later this week.
The euro was rangebound against the yen after 9 a.m. and firm against the dollar. At noon, it stood at 1 euro = 175.87-87 yen (175.77-79 yen at 5 p.m. at the end of the previous week), and at 1.1221-1221 dollars against the dollar (1.1198-1198 dollars).
Looking at the market overview as of 10 a.m., the dollar-yen pair was at 157.12 yen, about 25 sen above the New York closing level (156.87 yen) in a firmer dollar. Supported by the firm tone in Japanese stocks, the pair broke above last week’s high of 157.16 yen and rose to 157.22 yen at one point ahead of the Tokyo fixing. The Nikkei Stock Average opened lower, tracking last week’s U.S. stock decline, but the downside was limited, with the index briefly turning positive.
| Currency pair | 10 a.m. level | NY close | Difference |
|---|---|---|---|
| Dollar-yen | 157.12 yen | 156.87 yen | About 25 sen firmer dollar |
| EUR/JPY | 176.24 yen | 175.72 yen | About 52 sen firmer euro |
| EUR/USD | 1.1217 dollars | 1.1202 dollars | About 0.0015 dollars firmer euro |
Note: Figures are reference values at each time.
The reference ranges so far today are 156.79-157.22 yen for the dollar-yen pair, 1.1201-1.1227 dollars for EUR/USD, and 175.72-176.35 yen for EUR/JPY.
EUR/JPY traded slightly higher. At 10 a.m., it was at 176.24 yen, about 52 sen above the New York closing level (175.72 yen) in a firmer euro. After holding firm in the upper 175 yen range and rebounding into the 176 yen range, it extended gains to 176.35 yen, tracking the rise in the dollar-yen pair. EUR/USD was rangebound, at 1.1217 dollars at 10 a.m., about 0.0015 dollars above the New York closing level (1.1202 dollars). It struggled below the 1.1227 dollars marked in early trading, but after ranging in the lower 1.12 dollar area, it moved slightly firmer, above last week’s New York close.
The market remains focused on the Japan-U.S. monetary policy meetings due later this week. With participants wanting to see the outcome, aggressive position-taking is likely to be avoided, and unstable price action swayed by stocks, crude oil, and U.S. interest rates may continue for the time being.
finance.biggo.com