The US FOMC meeting will be held today. The results will be announced on the 16th of Japan time. Yields on US bonds have skyrocketed in the market at the beginning of the week as the US consumer price index accelerated unexpectedly last week. At one point, the yield on 2-10 year bonds was reversed. With the CME Fed Watch at the moment, the observation of a 0.75 percentage point rate hike has risen to just over 90%. There was almost a market consensus last week at 0.50 percentage points, but things have changed a lot.
Inflation in the US is rising and interest rates are rising, so upward pressure is spreading throughout the dollar market. The dollar-yen pair was bought first due to the weak yen and the strong dollar, but yesterday it reached the 135.19 level, the highest level in 24 years. It achieved a sharp level of 135 yen, and after that, it sold back to the 133 yen level.
It is also pointed out that the dollar-yen pair has accumulated a buying position due to the rise in advance. Also, the observation of a rapid rate hike is a big concern for the stock market. Stock prices are depreciating every day, and the dollar-yen pair is likely to lose its wheel. The BOJ’s operations are more important for yen sellers, and the point is how far interest rates can be restricted.
Ahead of the announcement of the results of the US FOMC, it is expected that trading will be nervously mixed in the last couple of days in view of US bond yields and stock trends. For the dollar-yen exchange rate, the high 135.19 level on the previous day is the high point and the low 133.59 level is the low point. The half price level of the range is 134.39 level. It is likely to be the immediate reference level.
The movement of the Japanese yen is becoming nervous and difficult to trade, so we are currently buying USD with CHF.
It is assumed that the yen entanglement will continue to be unstable.