Dollar-Yen Rises Toward 160 as Strong US Economy and Fiscal Deterioration Concerns Drive Upward Momentum
The dollar-yen pair has been rising steadily, and experts predict it will test the upside towards 160 yen in the coming days. The previous New York session saw the pair climb to 159.18 yen, and Tokyo trading is expected to remain firm around the 159 level.
The strong upward momentum can be attributed to several factors, including a renewed rise in U.S. long-term yields, solid U.S. economic indicators, and a reaffirmation of the strong-dollar policy by U.S. Treasury Secretary Bessent. Additionally, concerns over fiscal deterioration tied to the Ko Taka administration's expansionary fiscal stance have led to underlying yen-selling pressure, further supporting dollar buying.
The upcoming release of Japan's July national Consumer Price Index (CPI) will be closely watched, as it could shift expectations for an additional Bank of Japan rate hike and influence dollar-yen movements. If the inflation rate comes in below expectations, expectations for an additional BOJ rate hike could recede, potentially accelerating yen selling.