USD/JPY holds near 158 as Japan toughens its tone on the yen

The yen held its ground near 158 per dollar in early trade on Monday. FXStreet reports that the Japanese currency nursed small losses against the dollar but stayed inside recent ranges, as Prime Minister Sanae Takaichi pledged to keep public debt under control. investingLive adds that Japanese officials toughened their tone on the yen as USD/JPY held near 158.

The last ECB reference rate for USD/JPY was 157.670 on Friday, October 2. That was down 0.20% from Thursday's 157.980, the highest of the past five fixings. For the wider dollar story, read our weekly recap of the dollar's three-week run.

Japan: debt, data and the Bank of Japan

Takaichi said the government will manage the size of annual debt issuance carefully, while it watches the economy, prices, tax revenues, interest rates and debt-servicing costs, according to FXStreet.

The data also leans toward a firmer yen. Japan's services PMI eased to 51.3, but hiring picked up and output price inflation stayed near record highs, investingLive reports. investingLive reads the survey as hawkish for the Bank of Japan. It notes that S&P Global flags October as a possible month for another hike, which it calls supportive for the yen.

Yen crosses under pressure

EUR/JPY fell for a seventh straight day and tested the lower edge of its rising channel near 176.50, FXStreet says. AUD/JPY dropped below 110.00, and FXStreet calls its technical bias bearish. Liquidity in the Australian dollar is thinner than usual because Sydney is on holiday, investingLive notes.

Euro and pound

The euro also lost ground against the pound. FXStreet reports EUR/GBP near 0.8475, as fiscal worries in France after a steep bond-market rout raised fears of contagion in the eurozone.

The pound was down 0.26% near 1.3200 against the dollar. FXStreet sees the year-to-date low near 1.3140 as the key support level.

Oil and the wider backdrop

Oil stays in focus. ING's Warren Patterson, quoted by FXStreet, notes that ICE Brent has dipped below $100 a barrel several times but keeps settling above that level. Higher flows through the Strait of Hormuz and G7 reserve releases contrast with persistent Middle East tensions. investingLive reports Brent slipping toward $102 in Asian trade.

What to watch next

• Japanese officials. Any further comment on the yen, after the tougher tone investingLive reports.
• The Reserve Bank of India. Its policy week starts today, FXStreet notes.
• French bonds. The euro's weakness against the pound tracks the French fiscal story.

See the live USD/JPY chart on TradingView.