USD/JPY Rangebound Ahead of Crucial Jobs Report
The US dollar against the Japanese yen could remain relatively stable until Friday's release of the US jobs report. The data is expected to influence market expectations for the Federal Open Market Committee's next policy decision on October 28.
Recent official comments have contributed to the cap on USD/JPY, with Japanese Finance Minister Satsuki Katayama and others speaking out against a weak yen. These statements have been made in response to concerns about import costs due to higher energy prices resulting from Middle East hostilities.
Japanese exporters are expected to continue repatriating funds despite elevated import costs, given their strong sales and budget assumptions above USD/JPY 155. Meanwhile, investor positioning has seen a reduction in yen longs, with IMM CTAs paring some of their positions entered on the drop to 152.89.
The market is currently pricing around a 70% chance of a 25-basis-point FOMC hike in October, but expectations are not uniform following this month's increase. The Reuters poll forecasts a 90,000 increase in non-farm payrolls in September and an unchanged unemployment rate at 4.1%.