Next week's forex outlook: Focus on whether U.S. rate hike expectations will strengthen

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Fri May 22, 2026 5:22 pm JST Currency

Next week's dollar-yen exchange rate will likely focus on whether expectations for a rate hike by the U.S. Federal Reserve Board (FRB) will further intensify based on U.S. economic indicators and crude oil price movements. The expected range is 158.00 yen to 160.50 yen per dollar.

Minutes from the Federal Open Market Committee (FOMC) meeting held in April, released by the FRB on the 20th, revealed that many officials showed a stance of accepting the possibility of a rate hike. The persistently high crude oil prices will become a factor strengthening U.S. rate hike expectations as they lead to inflationary pressure, and if the April Personal Consumption Expenditures (PCE deflator) announced on the 28th exceeds market forecasts, a tightening policy stance will be perceived and dollar buying is likely to enter.

On the other hand, the strengthening view that the Bank of Japan will proceed with a rate hike at its June meeting is likely to support the yen. Policy Board Member Junko Koeda stated at a press conference on the 21st that "at this point, the risk of price increases is greater than the risk of recession," and attention will be focused on what Governor Kazuo Ueda will say at the international conference "New Perspectives on Monetary Policy" on the 27th. Additionally, persistent caution toward forex intervention by Japanese currency authorities is also likely to cap the upside of the dollar-yen exchange rate.

Meanwhile, major economic indicators to be announced in the U.S. next week include the Case-Shiller Home Price Index for March and the Consumer Confidence Index (Conference Board) for May on the 26th, the Richmond Fed Manufacturing Index for May on the 27th, the revised real Gross Domestic Product (GDP) for the January-March quarter and durable goods orders for April on the 28th, and the Chicago Purchasing Managers Index for May on the 29th. Domestically, the preliminary industrial production figure for April will be released on the 29th.

Source: MINKABU PRESS

*Translated by generative AI. Click here for the original article.