With dollar-buying on news and expectations of early U.S. rate hikes, the USD/JPY pair rebounded to the mid-159s.

【3/20Market Overview

Tokyo time, during a holiday, the dollar/yen is supported by resilient futures for US and Japanese stock indices and rises back to the 158 yen level, with a buying back trend leading the way158to rise to158.34yen. In European time, reports that “the United States will dispatch several thousand Marines and a couple of warships to the Middle East” helped intensify the Middle East tensions, sending crude oil futures higher and weighing on European and American stock markets. In the currency market, “defense-related dollar buying” was dominant. Also,3/17–18ofFOMCmeeting and remarks byPowellChairman of theFRBled to higher expectations for a rate cut being pared back, pushing USD/JPY up to159.38yen. In New York time, the market is pricing in potential rate hikes this year by the FRB, and in the short-term money market the probability of the FRB raising rates by up to10months has jumped to50%. Additionally, Waller, a member of the FRB, said, “Initially in this week’s FOMC we planned to advocate for rate cuts, but amid the rise in oil prices due to the Iran war, we shifted to keeping rates unchanged,” and he noted, “This conflict is likely to prolong, and oil prices may stay higher for longer. Inflation will become a bigger concern.”

【3/23Market View