Dollar-yen rises to 159 range; is the yen still being sold even after pricing in a September BOJ rate hike?
Technically, the dollar-yen exchange rate has once again found support at the 200 EMA and reversed upward, even though it had dipped below it following intervention.
Around 21:00 on Monday, August 10, the yen spiked momentarily on a Kyodo News report, but it was immediately bought back, leading to a stronger dollar and weaker yen.
The report suggested that the decisive factor in the U.S. coordinating to prevent yen depreciation was Governor Ueda's strong implication at the July 31 BOJ meeting that policy rates would be raised early after September; it did not contain any particularly new information.
That said, the market's price action can be interpreted as having the will to continue selling the yen even after pricing in a September BOJ rate hike. It seems this trend cannot be changed by a September rate hike.
Crude oil rises on Iran's hardline stance, U.S. interest rate hikes attract dollar strength
Is the fact that crude oil prices are back on an upward trend at the start of the week the background for the dollar's strength?
On August 9, the Houthi, a pro-Iranian armed group in Yemen, announced that they had attacked Saudi Arabian oil facilities (refineries) with drones. With successive attacks on tankers, the risk of physical supply disruptions from the Middle East is being strongly recognized once again.
Furthermore, regarding negotiations with the U.S., Iranian state television reported on August 8 that the Secretary of the Supreme National Security Council, Shamkhani, had presented the U.S. with six conditions for opening the Strait of Hormuz, including a permanent ceasefire with Iran and its proxies and the withdrawal of military forces from the surrounding area.
According to the post above,
Iran has issued a statement that the Strait of Hormuz will remain closed until the end of Trump's term in 2029, unless Trump accepts all of Iran's demands.
The Iranian side's demands are the following six items.
1. $300 billion in reparations
2. Release of up to $100 billion in frozen assets
3. Lifting of all sanctions
4. Withdrawal of U.S. military forces from the entire region
5. End of the naval blockade
6. Acceptance of transit fees for all vessels
Following these reports, crude oil appears to be rising again.
This is a chart with the dollar-yen chart and the WTI crude oil chart overlaid
(crude oil is the candlestick, dollar-yen is the yellow line)
Although the dollar-yen exchange rate plummeted following the employment statistics, it appears to be rising again in line with the upward trend in crude oil prices.
U.S. interest rates also fell following the employment statistics, but they are likely rising tonight due to the rise in crude oil prices.
However, there is also talk of this. The possibility of an agreement where the U.S. makes concessions may not be zero.
Breaking News: President Trump has privately suggested to aides that he is prepared to "withdraw" from an Iran war without a nuclear deal if Iran fully reopens the Strait of Hormuz, according to the WSJ.
U.S. stocks soft on high interest rates
With concerns about the fragility of the labor market following the U.S. July employment report released last week, if inflation does not fall and instead enters an upward trend, we could fall into a vicious cycle where we cannot cut interest rates despite a poor economy.
Therefore, U.S. stocks are soft tonight.
However, there is also the fact that the August employment report tends to come in low due to anomalies.
A frequently cited primary cause is the survey response rate. The initial release of the employment report (establishment survey) is a compilation before responses from companies are fully collected, but if you look at BLS response rate data, the response rate at the time of the initial compilation tends to be at its lowest level of the year during the summer months.
(June 2025 was 59.5%, July 57.6%, and August 56.7%, showing a slump, while September recovered to 80.2%)
The traditional explanation is that company reports are delayed due to the summer vacation season, and the late arrivals are reflected in subsequent revisions.
In addition, it is pointed out that in August, seasonal factors such as hiring in the education sector before the new school term and summer operational adjustments at factories cause large fluctuations, which seasonal adjustments and economist forecasts cannot fully capture.
Therefore, since there is a possibility of upward revisions later, I feel it is premature to conclude that the U.S. labor market is weak at this point.
Japanese stocks were firm before the Mountain Day holiday, but...
The Nikkei 225 has broken above the 25-day SMA and the Ichimoku Kinko Hyo baseline, and it appears that upside resistance has disappeared. The TOPIX briefly hit a record high. The chart looks good even with the stronger yen.
Corporate earnings are also solid, and if the rise in crude oil prices does not accelerate, we can continue to be bullish, but...
Schedule for Tuesday, 8/11
Japan is closed for the Mountain Day holiday.
Tomorrow there is an Australian monetary policy meeting, but interest rates are expected to remain on hold.