✅ Yen Buying Prevails Beneath the Surface of Stock Gains — Triple Risks Cap Upside
💹 Tokyo Session: Yen Buying Persists Despite Stock Rally
The Nikkei surged sharply in Tokyo trading, yet the FX market was dominated by yen buying pressure.
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USD/JPY fell below the key ¥151 level in the afternoon.
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EUR/JPY slipped from the mid-¥175s to the lower ¥175 range.
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GBP/JPY softened from the upper ¥201s to the mid-¥201s.
While equities appear buoyant on the surface, uncertainty and caution remain deeply embedded across markets.
💵 Dollar Selling: QT Pause and Rate Cut Speculation
The main driver behind dollar weakness was Fed Chair Jerome Powell’s suggestion of a pause in quantitative tightening (QT).
This reignited expectations for two rate cuts by year-end,
prompting U.S. yield declines and a subsequent renewal of dollar selling pressure.
Additional bearish factors include:
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Concerns over a cooling U.S. labor market
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The PBOC’s stronger yuan fixing, signaling tolerance for a firmer CNY
Together, these developments have revived dollar-selling sentiment originating from the U.S. side.
💴 Yen Buying: Political Uncertainty and Safe-Haven Demand
Yen strength stems from multiple overlapping catalysts:
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Unwinding of the “Takaichi Trade” amid Japanese political uncertainty
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Renewed U.S.–China tensions and rising geopolitical risks
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Resurgent demand for the yen as a safe-haven asset
The USTR’s restart of Section 301 investigations and China’s defiant response
have chilled market sentiment, reinforcing sustained yen demand.
💶 European Currencies Weighed by Political and Fiscal Concerns
The euro faced headwinds from French political instability,
while reports that President Trump is considering tariffs on Spain over defense spending issues
added to downside pressure.
In the U.K., Sky News reported that the Chancellor is considering tax hikes and spending cuts,
triggering a sharp selloff in the pound.
| Pair | Move | Comment |
|---|---|---|
| GBP/USD | 1.3373 → 1.3340s | Pound sold off after fiscal tightening report |
| GBP/JPY | ~¥201.90 | Continued volatility |
| EUR/GBP | 0.8691 → 0.8717 | Pound weakness boosted euro |
📊 Upcoming Key Events
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Eurozone Industrial Production (Aug)
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U.S. NY Fed Manufacturing Index (Oct)
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U.S. Beige Book Release
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G20 Finance Ministers & Central Bank Governors Meeting (through Oct 16)
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U.S. Corporate Earnings: Morgan Stanley, Bank of America, United Airlines, etc.
The delayed U.S. CPI (September) report is now scheduled for October 24,
and market attention is already shifting toward that release.
💹 London Session Snapshot
| Pair | Current | Comment |
|---|---|---|
| USD/JPY | ~150.98 | Yen buying dominates; upside capped |
| EUR/JPY | ~175.30 | Euro weighed by European risks |
| GBP/USD | 1.3345 | Downtrend continues on fiscal concerns |
| EUR/GBP | 0.8716 | Euro gains on pound weakness |
✅ Summary: Stocks Up, But “Risk-Off Yen Buying” Dominates
Despite headline stock gains,
the underlying tone of the FX market remains risk-averse, capped by three overlapping risk factors:
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Monetary policy risk — QT pause fueling dollar weakness
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Political risk — Japan’s coalition break and policy uncertainty
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Geopolitical risk — Renewed U.S.–China trade friction
The result is a twisted market structure where stocks rise while yen buying persists beneath the surface.
Expect nervous, choppy trading as markets navigate these competing forces in the coming sessions.
