Yen Holds Steady in Upper 157s Amid Dollar Buying Dominance
The Japanese yen traded within a narrow range in the upper 157s against the U.S. dollar during the Tokyo foreign exchange market on the morning of October 5th. Yen weakness was driven by expectations of higher U.S. interest rates and concerns that rising crude oil prices would negatively impact Japan's trade balance. However, the yen trimmed its losses after 10 a.m., leaving the market without a clear direction.
At 10 a.m., the dollar-yen pair stood at 157.75-76, marking a 0.18-yen depreciation of the yen compared to the previous Friday. The pair had earlier climbed to 157.98 but failed to breach the psychologically significant 158 level. A foreign exchange dealer at a Japanese bank noted 'dollar buying dominance,' with yen selling and dollar buying by Japanese importers weighing on the market. The 5th, being a 'gotobi' day with concentrated corporate settlements, amplified yen-selling flows.
After the mid-rate fixing, yen buying strengthened, briefly pushing the dollar-yen pair to 157.48. Meanwhile, EUR/JPY traded on a soft note, opening at 177.62 and later falling to 176.95. EUR/USD also widened its losses, with the pair standing at $1.1241-42 at 10 a.m. Market participants highlighted that rising U.S. long-term yields and concerns over Japan's trade balance were supporting yen selling and dollar buying.
The near-term focus remains on whether the dollar-yen pair will break above the 158 threshold or fall below the mid-157 level. Some market participants believe that once flows from Japanese real-demand players have run their course, direction will be more readily determined by speculation surrounding the Federal Reserve's monetary policy and U.S. economic indicators.