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📘 Quiet Tension Ahead of the FOMC — A Directionless Start to the Week

📘 Quiet Tension Ahead of the FOMC — A Directionless Start to the Week

USD/JPY trapped in the low 155s with no clear trend

【1】Overall Market: A “FOMC-Waiting” Session With Limited Activity

The new week opened with extremely limited market-moving catalysts.

  • In Europe, only German industrial production was notable

  • No major U.S. data during NY hours

  • Participants remain in a “wait-and-see until FOMC” mode
    → Resulting in typical pre-FOMC price action: narrow ranges, low conviction, and muted trading in both bonds and FX.

【2】USD/JPY: Yen Strength Persists, But the Headlines Are Losing Impact

During Tokyo hours, Reuters reported:

“The BoJ is likely to proceed with a December rate hike, with government approval.”

USD/JPY fell about 30 pips on the headline.

However—

Governor Ueda has already stated
“Rate adjustments will be discussed at the December meeting,”
meaning the news lacked freshness, and USD/JPY did not break new lows.

✔ Yen-buying pressure remains intact,
but the report is “additional noise,” not a decisive trigger.

【3】NY Session Focus: NY Fed Inflation Expectations

U.S. data today is minor.

Key event:

  • NY Fed 1-year inflation expectations
    → The focus is on its stickiness above 3%, despite a gradual decline.

The market has already fully priced in a December Fed rate cut,
so this data alone is unlikely to move markets significantly.

However—
U.S. 3-year Treasury auction (USD 58bn)
could impact yields, thereby influencing FX.

【4】Europe & UK: Speeches, but Limited Market-Moving Potential

ECB:

  • Cipollone

  • Villeroy de Galhau
    Both speak, but with rate holds already a done deal, no surprises expected.

BOE:

  • Taylor

  • Lombardelli (Deputy Governor)

With a 90% probability of a rate cut next week,
dovish remarks could pressure GBP modestly.

【5】London Open: U.S. Yields Rebound → Dollar Sees Short-Covering

U.S. 10-year yields rose from 4.12% to 4.14%, triggering USD buying.

Major FX reactions:

  • USD/JPY: rebound to 155.46

  • EUR/USD: 1.1672 → 1.1650 pullback

  • GBP/USD: 1.3347 → 1.3319 softer

Equities in Europe and the U.S. traded sideways near last week’s closes.

➡ A market fully reflecting a “no one wants to act before FOMC” sentiment.

【6】Today’s Key Events (Quick Calendar)

Europe

  • Germany Industrial Production (Oct)

United States

  • NY Fed 1-year Inflation Expectations

  • U.S. 3-year Treasury auction (USD 58bn)

Others

  • ECB & BOE speakers

➡ Market expected to remain in pre-FOMC positioning mode throughout the day.

【7】Summary: The Real Driver Today Is “Time Until FOMC”

Three themes dominate today:

✔ Lack of fresh catalysts
✔ Investors waiting for FOMC
✔ Slight USD rebound on higher U.S. yields

But the medium-term structure remains unchanged:

  • BoJ December hike expectations → Yen buying bias

  • Fed December cut probability at 87% → Dollar selling bias

➡ Even with rebounds, USD/JPY is likely to face heavy topside resistance.

🔍 Key Takeaways for Today

  • How overseas markets digest the latest BoJ rate-hike headlines

  • Direction of U.S. yields (especially the 10-year)

  • NY Fed inflation expectations

  • Pre-FOMC position adjustments leading to sudden “flash moves”

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