EBC Trading Market Report: Lower Oil Prices and Rebound in US Tech Stocks, Dollar-Yen Shifts Toward Yen Appreciation Again
Summary of the Previous Trading Day
In the Tokyo market on the 26th, the dollar-yen pair fluctuated around 157 yen. In the morning, it rose to 157.22 yen due to dollar buying ahead of the fixing and a recovery in Japanese stocks. Later, it fell to 156.65 yen before noon, following a decline in US long-term interest rates and a softening in stock prices. In the afternoon, it returned to the 157.10 yen range as stocks were bought back, but with monetary policy meetings in Japan and the US approaching, the direction remained uncertain.
In the London market, the US 10-year Treasury yield rebounded from the 4.95% level seen during the Tokyo midday, leading to a dominance of dollar buying and yen selling. The dollar-yen pair rose to around 157.50 yen. France’s credit rating being maintained and higher European stock prices also eased risk concerns. However, the euro-dollar pair was pressured by dollar buying during European hours, falling to the 1.1180 dollar level.
In the NY market, yen buying paused following a rebound in AI-related stocks, and the dollar-yen pair briefly reached 157.64 yen. The four price points for the 26th were: opening at 156.93 yen, high at 157.64 yen, low at 156.65 yen, and closing at 157.50 yen. The euro-dollar closed at 1.1174 dollars, and the euro-yen closed at 176.00 yen. US stocks saw the Dow average up 0.28%, the S&P 500 up 0.70%, and the Nasdaq Composite up 0.82%. Meanwhile, WTI crude oil for December delivery fell 1.46% to 101.76 dollars, and the US 10-year Treasury yield fell slightly to 4.986% at 5:32 AM on the 27th, Japan time.
Assessing Yen Appreciation Pressure Ahead of US Indicators and Monetary Policy Meetings
According to the reference rate distributed at 7:20 AM on the 27th, the dollar-yen is in the mid-156 yen range. It is moving toward yen appreciation from the previous day’s closing price of 157.50 yen. While lower oil prices and higher US tech stocks are factors that ease risk aversion, they do not necessarily mean that yen selling will continue. If US long-term interest rates fall, it will cap the dollar’s upside, and yen buying ahead of the Bank of Japan meeting will persist. It is necessary to view the previous day’s stock gains and this morning’s yen appreciation separately.
Today, the US September durable goods orders are scheduled to be announced at 9:30 PM Japan time, and the US October consumer confidence index at 11:00 PM. If durable goods orders exceed expectations, the resilience of the US economy will be highlighted, potentially supporting the dollar through rising interest rates. However, this week features the FOMC results on the 28th US time, the Bank of Japan meeting on the 29th-30th, and US GDP and personal income/expenditure statistics on the 29th. We want to confirm whether short-term indicator reactions will lead to changes in policy outlooks.
Key Points for Today
For the dollar-yen, we will use the previous trading day’s low of 156.65 yen and high of 157.64 yen as benchmarks. If the reference value of the mid-156 yen range on the morning of the 27th clearly falls below and settles under 156.65 yen, the next confirmation level is the low of 156.08 yen from the 23rd. On the other hand, even if it returns to the 157 yen range, we want to gauge the momentum of yen depreciation by seeing if it can exceed the previous day’s high of 157.64 yen. We will check the opening of Tokyo stocks and the US 10-year Treasury yield together.