📉 BoJ Rate-Hike Speculation Keeps Fueling Yen Strength; NY Session Hinges on PCE & Labor Data
■ 1. Market Overview — “BoJ Turning Hawkish × Fed Turning Dovish” = Yen Strength / Dollar Weakness
Tokyo trading once again saw broad JPY buying.
Persistent headlines pointing to a December BoJ rate hike, combined with U.S. December rate-cut expectations rising to 87%, continued to narrow the U.S.–Japan rate differential—driving the yen higher across the board.
Key drivers:
- Reports that the Japanese government will approve a December rate hike
- U.S. rate-cut pricing deepening → Dollar Index softening
As a result:
- USD/JPY dropped into the mid-154s,
- Cross-yen pairs also softened.
However, after London opened, profit-taking and short-covering pushed USD/JPY back upward, shifting the battle to:
“JPY appreciation momentum” vs. “oversold USD/JPY rebound.”
■ 2. USD/JPY: Downtrend Intact? A Rebound Today, but 154 Re-Test Still in Play
▼ Tokyo Session — BoJ headlines accelerate yen buying
A Bloomberg report:
“BoJ set to hike in December, with government approval likely.”
USD/JPY fell to 154.55, nearing the previous day’s 154.51 low.
▼ London Session — Sharp rebound on short-covering
The pair briefly touched 154.35, but then recovered to the 155 area.
Interpretation:
- Much of the “BoJ December hike” is already priced in
- Downside pressure remains, but oversold rebounds are likely
■ 3. Focus Tonight: U.S. PCE (September) & Labor-Market Indicators
In New York, several key releases will shape year-end positioning.
◆ PCE Price Index (September)
- Headline YoY: 2.8% forecast
- Core YoY: 2.8% forecast
Because this is delayed September data (due to the government shutdown), market sensitivity is expected to be low unless a major surprise emerges.
◆ Labor data will matter far more
- Initial jobless claims
- Challenger layoffs
- Personal income & spending
- Durable goods (final)
- Factory orders
- U. Michigan sentiment
If labor data clearly softens → Dollar selling accelerates → USD/JPY likely re-enters the 154 handle.
■ 4. Major FX Moves — Dollar Selling Lifts Europe
EUR/USD
- Climbed to 1.1677 on broad USD weakness
- Eurozone CPI: 2.2% YoY (above expectations)
- ECB stance unchanged → reaction limited
GBP/USD
- Hit 1.3359 before stalling
- Upward momentum capped by UK fiscal concerns and
estimates that 30-year gilt yields could rise toward 6% - GBP/JPY dropped to 206.73
Cross-yen
- Broad yen buying pushed all cross-yen pairs lower
- Partial recovery seen in London, but yen strength continues to cap upside
■ 5. Today’s European Data — No Major Surprises
| Indicator | Forecast | Actual | Comment |
|---|---|---|---|
| Eurozone Unemployment | 6.3% | 6.4% | Slight deterioration |
| HICP YoY | 2.1% | 2.2% | Slight beat |
| HICP MoM | -0.3% | -0.3% | As expected |
| Core HICP | — | 2.4% | Stable |
Overall: inflation data brought no meaningful policy implications for the ECB.
■ 6. Central Bank Speakers
- BoE Governor Bailey
- ECB’s Lane, Cipollone, de Guindos
- Austria’s Holzmann
- Fed’s Bowman (no policy comments due to blackout)
→ Market impact expected to be minimal.
■ 7. London Early Session Quotes
| Pair | Quote |
|---|---|
| USD/JPY | 154.80 → 155.00 |
| EUR/USD | 1.1677 |
| GBP/USD | 1.3340–1.3360 |
| GBP/JPY | 206.73 |
| EUR/GBP | 0.8752 |
✔ 8. Conclusion — USD/JPY Bias Remains Down, but Rebound Risk Coexists
▼ Powerful yen-supporting factors remain intact:
- Consecutive reports reinforcing a BoJ December hike
- U.S. rate-cut pricing rising (Dec: 87%)
→ Narrower U.S.–Japan rate spread → Persistent yen strength
▼ But rebound risk cannot be ignored:
- Heavy selling in Tokyo triggered short-term positioning imbalances
- London session already showed aggressive short-covering back to 155
▼ Tonight’s decisive drivers:
- U.S. PCE (limited impact unless surprise)
- U.S. labor indicators (key catalyst)
Weak data → USD/JPY retests 154 or below
Stronger data → Rebound toward the upper-155s
