The dollar-yen exchange rate from tonight through tomorrow is expected to see a tug-of-war between the view that a resolution to the Middle East conflict will not come easily and heightened concerns over intervention by Japanese currency authorities. The expected range is \159.20 to \160.10 per dollar.

U.S. President Trump delivered a speech to the American people on the night of the 1st (morning of the 2nd Japan time), indicating that "core strategic objectives" in the war with Iran are close to being achieved. However, he also stated that he intends to "launch extremely severe attacks over the next two to three weeks" and that "if Iran's new leadership does not engage in satisfactory negotiations, attacks on the country's power generation facilities and oil infrastructure will begin." With market expectations for ceasefire-related remarks running high, "safe-haven dollar buying" is likely to emerge. Should crude oil futures strengthen further, this could serve as a factor for yen selling on speculation that Japan's trade balance will deteriorate.

However, at levels where the dollar-yen rate exceeds \160, market participants are likely to be conscious of Japanese government officials' verbal warnings against yen depreciation, making aggressive yen selling difficult amid intervention concerns. Additionally, with the March U.S. employment report scheduled for release on the 3rd, there is reluctance to tilt positions in one direction. Later tonight Japan time, the previous week's U.S. initial jobless claims and February U.S. trade balance figures are scheduled for release.

Source: MINKABU PRESS