Dollar-Yen Struggles Near 200-Day Average Ahead of FOMC Minutes

The foreign exchange market on October 7 is closely watching whether the dollar-yen pair can break above its 200-day moving average, ahead of the release of the Federal Open Market Committee (FOMC) minutes from the September 15-16 meeting. The pair has been struggling in the low 158-yen range, with traders expecting it to trade between 157.400 and 158.800 yen. The key focus is whether it can surpass the 200-day moving average, which sits around 158.53 yen.

The FOMC minutes will provide insight into the Federal Reserve's stance on inflation and potential rate hikes. The market has lowered the probability of a rate hike in October to around 20%, influenced by cautious remarks from Fed officials and weak U.S. employment data. However, if the minutes indicate strong inflation concerns, expectations for an earlier rate hike could resurface.

On October 6, the dollar-yen pair rose slightly, driven by yen selling amid speculation about the Bank of Japan's future rate hikes. Bank of Japan Governor Kazuo Ueda emphasized that accommodative financial conditions will continue to support economic activity, but cautioned about the risks of rising underlying inflation. Meanwhile, easing concerns over France's fiscal situation led to dollar selling against the euro, capping upside momentum.

The U.S. trade deficit for August exceeded market expectations, reaching $105.6 billion, driven by record high imports of semiconductors and petroleum products. Stock markets rose across major indices, with the Nikkei 225 and NY Dow both posting gains. The yield on the 10-year U.S. Treasury fell slightly, while NY gold futures rose.