[Impact on USD/JPY?] U.S. stocks plunge, Nikkei stock average also falls back; market heads toward an important turning point
U.S. stocks slump as Nikkei also retreats; market at a crucial juncture
・Market pauses ahead of the U.S. CPI release tonight
CPI beats expectations → higher likelihood of rate cuts diminishing → dollar strengthens; USD/JPY rises
CPI misses expectations → rate-cut expectations revive → dollar weakens; USD/JPY falls
June 9 U.S. stock market saw renewed selling in AI and semiconductor-related shares, with the Nasdaq Composite down 0.97% and the S&P 500 down 0.26%.
Meanwhile, defensive sectors such as financials and healthcare attracted buying, and the Dow Jones Industrial Average rose modestly by 0.17%.
The market structure shows a clear flow of “high-tech selling, value buying.”
A primary factor for the decline is profit-taking due to overheating AI-related stocks.
Semiconductors, which had driven the market, fell across the board, cooling investor sentiment. In addition, tensions in the Middle East around the U.S. and Iran heightened geopolitical risk concerns.
Additionally, strong U.S. employment data pushed back expectations for Fed rate cuts, keeping U.S. long-term rates high, which is a headwind for tech stocks.
The market is turning cautious ahead of tonight’s U.S. CPI release.
Following this trend, risk-off selling dominated the Japanese market as well, with the Nikkei notching a drop of more than 500 points at one point on the 10th. In particular, selling in semiconductor-related stocks such as Tokyo Electron and Advantest stood out.
This week features important events: U.S. CPI on the 10th, PPI on the 11th, and SpaceX’s major IPO on the 12th. Depending on the results, it will be crucial to determine whether the stock market rebounds or enters a full-fledged correction phase.
How will the plunge in U.S. stocks affect FX?
This U.S. stock decline in FX markets centers mainly on two points: “risk-off” and “U.S. interest rates.”
First, as AI and semiconductor stocks fall and Middle East tensions intensify, investors seek to avoid risk, generally lifting the yen and the U.S. dollar. If geopolitical risk worsens further, a stronger stock sell-off and yen buying could intensify.
However, in this case, U.S. employment data remain strong and Fed rate-cut expectations have diminished, keeping U.S. rates elevated. When U.S. rates stay high, the dollar tends to strengthen, supporting USD/JPY.
In other words, the current USD/JPY is facing a tug-of-war between:
- Risk-off → yen buying pressure
- Higher U.S. rates → dollar buying pressure
Thus, at present it is not a scenario where stock weakness leads to a sharp fall in USD/JPY; the pair is staying relatively firm around 159–160.
What to watch going forward
Most important is tonight’s U.S. CPI data.
- CPI beats expectations → rate-cut expectations retreat → dollar strengthens; USD/JPY rises
- CPI misses expectations → rate-cut expectations revive → dollar weakens; USD/JPY falls
From a trader’s perspective, the more impactful dynamic now is the flow from CPI → Fed → interest rates, rather than the stock price itself, for currency movements.
In particular, the 160-yen level is a major battleground for USD/JPY, and the key event this week is whether it breaks upward on CPI or pulls back toward the 158 area.
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