Yen Weakens as Oil Prices and Rate Hike Fears Persist

The Japanese yen weakened slightly in Tokyo trading on October 5, slipping to around 157.63-66 per dollar. The decline was driven by elevated crude oil prices and persistent expectations of U.S. interest rate hikes. Uncertainty in the Middle East kept oil prices high, raising concerns about Japan's trade balance and prompting yen selling. Political and fiscal anxieties in France also contributed to dollar buying, further pressuring the yen.

Crude oil futures remained elevated, with U.S. crude trading near $90 per barrel. The Houthi militant group's attacks on Saudi facilities on October 4 added to supply uncertainties. Meanwhile, the euro fell for an eighth consecutive session against the dollar, reaching $1.1199-1.1200. The yen strengthened slightly against the euro, trading at 176.52-55 per euro, its highest level since early November 2025.

The September U.S. Employment Report showed weaker-than-expected job growth, with nonfarm payrolls increasing by just 29,000. This reduced expectations of an October rate hike, but markets still anticipate a December hike and two more in early 2027. The 10-year U.S. Treasury yield hovered around 5.26%, reflecting concerns over inflation and fiscal risks.

In technology news, TDK unveiled a prototype of smart glasses that project images directly onto the retina. The device uses a proprietary meta-optics mirror, just 150 nanometers thick, allowing clear visuals regardless of visual acuity. TDK is collaborating with QD Laser to develop a full-color display system, with mass production targeted within a few years.