The dollar-yen strengthened its upward trend in the Tokyo foreign exchange market on the morning of the 20th, briefly bought to 158.60 per dollar and surpassing the previous day’s high. Dollar buying driven by awareness of the widening interest rate differential between Japan and the U.S. is supporting the market, with the pair subsequently pulling back to the 158.50 level.
In the U.S. bond market the previous day, the U.S. 10-Year Treasury Yield rose to 5.14%, while Japan’s 10-year government bond yield fell to 2.90%. The widening of this rate differential is seen as having led to yen selling and dollar buying. Rising crude oil prices are also being watched as a factor supporting the dollar.
The dollar-yen also edged higher in the New York market the previous day. When the U.S. 10-Year Treasury Yield, a benchmark for long-term U.S. rates, rose to the 5.12% level, yen selling took the lead, and shortly after 11:30 p.m. the pair hit 158.45, updating the day’s high. The October U.S. NAHB Housing Market Index released at 11:00 p.m. came in at 29, below the market forecast of 31, but the market reaction was limited.
In cross-yen trading, EUR/JPY was traded in a range of 176.64 to 177.82, while EUR/USD moved between 1.1208 and 1.1215. In the New York market the previous day, EUR/USD’s rebound was sluggish at 1.1217, weighed down by rising U.S. long-term yields. EUR/JPY moved narrowly around 177.71, with the previous week’s high of 177.97 seen as near-term resistance.
The main trading ranges in today’s Tokyo market are as follows.
| Currency Pair | Low | High |
|---|---|---|
| Dollar-yen | 158.43 | 158.60 |
| EUR/JPY | 176.64 | 177.82 |
| EUR/USD | 1.1208 | 1.1215 |
Note: Trading ranges for the Tokyo morning session. In the previous day’s New York market, the dollar-yen traded from 157.70 to 158.45, EUR/USD from 1.1183 to 1.1235, and EUR/JPY from 176.73 to 177.78.
As long as the widening interest rate differential between Japan and the U.S. continues, upward pressure on the dollar-yen is likely to persist. Market participants are keeping an eye on crude oil prices in addition to developments in U.S. long-term yields.
finance.biggo.com