The dollar-yen exchange rate is expected to remain volatile next week, buffeted by Middle East developments as an early ceasefire between the United States and Iran remains elusive. The anticipated trading range is \158.00 to \161.50 per dollar.

U.S. President Trump has maintained his hardline stance following his speech on the night of the 1st (morning of the 2nd Japan time), in which he stated that "the United States will intensely attack Iran over the next two to three weeks." On the 2nd, he posted on his social media platform that "Iran's largest bridge has collapsed and will never be used again." Iran's Revolutionary Guard announced on the 2nd that it had attacked data centers belonging to Amazon.com Inc. in Bahrain and Oracle Corporation in Dubai, United Arab Emirates (UAE), making the prospect of a near-term ceasefire appear increasingly unlikely. As Middle East tensions deepen further, "safe-haven dollar buying" is likely to emerge.

However, there have been some positive developments, including reports that "Iran is drafting a cooperation agreement with Oman to monitor navigation through the Strait of Hormuz." If speculation about a prolonged de facto blockade of the strait recedes and crude oil futures stabilize, the unwinding of accumulated long dollar-short yen positions could accelerate. Additionally, at levels above \160 per dollar, concerns about potential intervention by Japanese currency authorities are likely to trigger yen buybacks.

Major U.S. economic indicators scheduled for release next week include the ISM Non-Manufacturing Index for March on the 6th, Durable Goods Orders for February on the 7th, the final reading of Real GDP for the October-December quarter and the PCE Deflator for February on the 9th, the Consumer Price Index (CPI) for March and Manufacturing New Orders for February on the 10th. In Japan, the Household Survey for February will be released on the 7th, the Monthly Labour Survey and Current Account Balance for February on the 8th, and the Corporate Goods Price Index for March on the 10th.

Source: MINKABU PRESS