💹 A Broad Correction Sweeps Through Risk Assets — “Bad Yen Weakness” Quietly Deepens in FX Markets
— USD/JPY Holds Firm in the Mid-155s as Underlying Yen-Selling Pressure Persists
■ Market Overview: Investor Risk Appetite Retreats Further
This week’s market has clearly shifted into a corrective phase for risk assets.
The sharp selloff in AI-related stocks that began late last week has cooled investor sentiment, and that weakness has shown no signs of stabilizing as the new week begins.
The key signs are unmistakable:
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Cryptocurrencies have erased nearly all their year-to-date gains
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Gold is under pressure from liquidation flows
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November’s typical fund rebalancing and profit-taking is adding to the drag
In short, equities, crypto, and commodities are all seeing outflows under the broad category of “risk assets.”
■ USD/JPY: Yen Selling Dominates as the Pair Climbs Into the 155s — Highest Since February
Even in this risk-off environment, USD/JPY continues to show its own unique strength.
In Tokyo trading, the pair rose to 155.40, approaching the weakest yen levels since February 4.
Several factors are making the yen particularly vulnerable to selling:
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Risk-off flows are favoring USD demand
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Concerns over the Kishida administration’s (now Takaichi administration’s)
large-scale, opaque expansionary fiscal policy -
A visible “Japan-selloff chain,” where
bond selling → yields rise → stocks fall → yen weakens
As a result, market participants are increasingly viewing the situation as a form of structural, unhealthy yen weakness.
■ Structural Factors Making the Yen’s Decline Hard to Stop
While FX volatility appears contained on the surface, the underlying forces keeping the yen from strengthening are clear:
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Even during risk-off phases, yen-buying flows remain weak
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Government/BOJ intervention warnings ironically deter aggressive yen buying
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Deteriorating Japan–China relations are raising concerns over
inbound tourism and investment inflows
The outcome is a continuation of a market dynamic where the yen is “not bought, and easily sold,” gradually tilting the bias toward further yen depreciation.
■ Upcoming Overseas Data: Plenty of Releases, Limited Impact
Key data scheduled for release tonight includes:
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Hong Kong employment data
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Hungary’s central bank rate decision
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Canada housing starts
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U.S. factory orders / durable goods (final) for August
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U.S. NAHB Housing Market Index
→ Collectively, these are unlikely to drive major price action.
Among them, the market will pay relatively more attention to the U.S. ADP private employment (weekly).
Weekly figures have been moving markets recently, so depending on the headline, the dollar may see short-lived volatility.
■ Key Event: Meeting Between PM Takaichi and BOJ Governor Ueda
The meeting between the Prime Minister and the BOJ Governor this afternoon ended with no surprises.
However, the real concern lies elsewhere:
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PM Takaichi made comments regarding Taiwan
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China sharply criticized Japan for “interference in internal affairs”
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Japan refused to retract the remarks, suggesting a prolonged period of tensions
This confrontation carries the risk of becoming a geopolitical headwind for Japan, to which the yen tends to react sensitively.
🇬🇧 London Open: Temporary Yen Buying on Global Equity Weakness, but Momentum Fades Quickly
As London trading began, broad equity weakness triggered an initial wave of yen buying.
However, the move lacked follow-through, and USD/JPY and cross-yen pairs soon slipped back into heavy-topsided price action.
Key market moves:
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Nikkei: −1,600 points, a steep decline
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European equities: soft opening
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U.S. 10-yr yield: 4.14% → 4.09%
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Gold & crude: heavy tone remains
■ USD/JPY Price Action
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Pulled back to 154.82 in the Tokyo afternoon
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Rebounded toward 155.20, but failed to sustain momentum
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Prior NY close at 155.26 is acting as stiff resistance
■ Key Cross-Yen Levels
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EUR/JPY: 179.61 – 180.02
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GBP/JPY: 203.70 – 204.30
Overall, the market remains stuck in a state where:
“Yen buying is weak, but the drivers of yen weakness are also losing force.”
A stagnant, low-energy environment is dominating price action across yen pairs.
