In the morning Tokyo foreign exchange market on the 27th, the dollar-yen faced heavy topside pressure. Following the rebound in the previous day’s New York stock market, risk-aversion eased and yen selling led the way. The pair was bought up from 157.42 yen to 157.76 yen, but then stalled, trading around 157.70 yen as of noon. That is about 20 sen stronger for the dollar compared with the New York close (157.50 yen), but the upward momentum did not persist.
What capped the market’s upside was the loss of momentum in U.S. interest rates and crude oil prices. The U.S. 10-Year Treasury Yield edged lower in off-hours trading from the 4.99% level to around 4.97%. New York crude futures (WTI) also fell to the upper 100s per barrel, thinning out cues for dollar buying. With the Nikkei Stock Average trading firmly, yen selling remained resilient, but buying ran its course after the pair edged up to 157.76 yen following the Tokyo fixing.
EUR/JPY traded in a range. Tracking the dollar-yen’s gradual rise, it edged up to 176.19 yen, but was pushed back as the dollar-yen stalled, staying within a narrow band in the lower 176 yen zone. As of noon it was at 176.16 yen, about 16 sen stronger for the euro versus the New York close (176.00 yen). EUR/USD was little changed at 1.1170 dollars, about 0.0004 dollars weaker for the euro compared with the same close (1.1174 dollars).
The main trading ranges so far today are as follows.
| Currency Pair | Low | High |
|---|---|---|
| Dollar-yen | 157.42 yen | 157.76 yen |
| EUR/JPY | 175.94 yen | 176.19 yen |
| EUR/USD | 1.1162 dollars | 1.1178 dollars |
Note: Based on morning Tokyo trading.
On the Japanese economic data front, the September Corporate Services Price Index rose 3.7% year-on-year, matching both market expectations and the previous reading. Upward pressure on service prices remains persistent, a level that could influence speculation over the Bank of Japan’s monetary policy conduct, but the direct reaction in the day’s currency market was limited.
Among market participants, the plateauing of U.S. long-term yields in the upper 4.9% range and the stalling of the crude oil market are being watched as gauges of the durability of dollar strength. While the firmness of the Nikkei Stock Average supports yen selling, falling U.S. rates are suppressing dollar buying, leaving the market without clear direction. In the afternoon, participants are seen as strongly inclined to assess U.S. economic indicators and overseas market developments, with many expecting price action to continue in the lower-to-upper 157 yen range.
finance.biggo.com