In the foreign exchange market at the beginning of the week, the yen exchange rate has been turbulent. The unexpectedly strong result of last weekend’s US employment statistics led to a sharp rise in US bond yields and the dollar/yen pair climbed from the 128 yen level to the 131 yen level at the end of the weekend. The dollar is also strengthening against major currencies such as the euro-dollar and pound-dollar.
Furthermore, in a weekend Nikkei Net report on Sunday, it was stated that “the government sounded out the appointment of Deputy Governor Amamiya as the successor to Bank of Japan Governor Kuroda.” He is the candidate for the next president who is the closest to Governor Kuroda’s ultra-loose policy. At the beginning of the week, the Oceania market started trading with the yen depreciating at once. The dollar/yen hit a new high near 132.56. After that, yen selling took a break in response to a series of negative reports from government sources such as Finance Minister Suzuki. However, the dollar/yen pair is still hovering in the high 131 yen range, with the yen depreciating by more than 3 yen from the Tokyo market last weekend and the dollar strengthening.
Expectations of fluctuations in the dollar-yen exchange rate usually settle down after events such as the announcement of central bank policies in the United States, the United Kingdom, Europe, and the United States last week, and the release of the US employment statistics. However, expectations for short-term fluctuations in the dollar/yen pair remain high as speculation surrounding the Bank of Japan’s personnel affairs and US monetary policy remains unstable. In the morning, the dollar-yen one-week volatility was hovering around 14%. The euro-yen and pound-yen exchange rates are also hovering in the 13% range, which is considerably higher than against the dollar.
The series of economic statistics released this week will not receive as much attention as last week. However, in addition to the Bank of Japan personnel affairs mentioned above, there is a possibility that speculations such as the political situation in the United States and China will fly around, and the market is likely to remain unsettled for the time being.
It is assumed that currency pairs related to the Japanese yen will continue to experience large price fluctuations. In particular, we are paying attention to where the upper price of USDJPY will stop.
