Crude oil fell by 4%.
The US 10-year Treasury yield broke below 5%.
Normally, you’d think, ‘Time to sell the dollar, the dollar-yen will drop, right?’
But in New York on September 21, 2026, the dollar-yen didn’t fall from the 157 range.
The low was 157.17 yen.
According to Trader’s Web, the closing price was 157.36 yen, marking a continued rise.
Even though the factors were pointing downward, why didn’t the price drop?
Today, I’m going to dig into just that.
First, what happened in New York on the 21st?
I’ll lay out the facts first. All figures are from around the New York market close.
・US 10-year Treasury yield 4.953% (-0.043 from previous day)
・US 30-year Treasury yield 5.285% (-0.041 from previous day)
・US 2-year Treasury yield 4.751% (+0.007 from previous day)
・NY crude oil -4.15%
・Dollar-yen 157.17–157.53 yen (NY time range according to Fisco)
・Euro-dollar 1.1496 → 1.1462 dollars (dollar-strengthening direction)
The trigger for the drop in crude oil was President Trump saying he was ‘probably open’ to a meeting with Iran during the UN General Assembly.
Furthermore, reports that the interior ministers of Iran and Pakistan were discussing a peace process added to the sentiment.
The US-Iran conflict might be resolved through diplomacy.
→ Concerns over crude oil supply ease
→ Inflation concerns decrease
→ Long-term interest rates fall
Up to this point, it followed the textbook flow.
In fact, Fisco’s market overview also noted that ‘dollar buying retreated in line with the decline in interest rates.’
Downward pressure on the dollar-yen was indeed present.
However, it wasn’t pushed down enough to break below 157 yen.
What fell was only the “interest rates of the distant future”
Please look at the chart below.
Both the 10-year and 30-year yields fell by about 4bp.
But only the 2-year yield actually rose a little bit.
This is subtle, but it is an extremely important point.
In short, what fell due to lower crude oil prices was the “outlook for inflation and interest rates 10 to 30 years from now.”
The outlook for “what the Fed will do with policy rates over the next 1 to 2 years” has hardly moved.
The yield spread between the 2-year and 10-year narrowed from +25bp on the previous business day to +21bp.
It was a situation where only the longer end sank.
And as for which one the dollar-yen is looking at, the prevailing view is that it weighs the shorter end more heavily.
Holding the dollar-yen is, in short, the same as “borrowing yen and holding dollars.”
What matters at that time is not the interest rate 30 years from now, but the interest rate differential over the next few months to a few years right in front of us.
On September 16th, the Fed raised interest rates for the first time in three years, and another hike is expected within the year.
Meanwhile, the Bank of Japan raised rates on the 18th, but 2 out of 9 members dissented.
Because of that, the view emerged that “the next move by the Bank of Japan won’t be that soon.”
The short-term Japan-US interest rate differential will not narrow just because crude oil prices fell.
It can be concluded that the reason the dollar-yen stayed in the 157 range on the 21st was because this structure remained in place.
Looking at how the dollar was being bought against the Euro-Dollar as well, it doesn’t seem to be just a Yen issue.
Where to look when there is a discrepancy between the ‘magnitude of the news’ and the ‘price movement’
What I do first on days like this, before reading news headlines, is line up the interest rates by maturity.
If you only look at headlines like ‘Crude oil plunges! Interest rates fall!’, you’d want to enter by selling the dollar, right?
But when you break down the details, it was only the 10-year and 30-year that were down.
The 2-year was up.
If you don’t notice this and enter a Dollar-Yen short, you’ll get taken up to 157.5 yen while waiting for it to break below 157 yen 😇
When the news is big but the price doesn’t move, it’s usually because the ‘place where that news has an effect’ and the ‘place the price is looking at’ are misaligned.
In this case, the drop in crude oil affected long-term interest rates, while the Dollar-Yen was looking at short-term interest rates.
That’s all there is to it.
Adding just one more thing, on the 21st there was an option expiration of 2.29 billion dollars at 157.00 yen at the 23:00 NY time cut (according to Minkabu data).
Whether this supported the 157 yen level or not, I honestly don’t know.
However, the fact that the low was 157.17 yen is worth noting 🥺
In the first place, this is Dollar-Yen while Japan is on a three-day weekend.
This is something you shouldn’t forget.
Japan is on holiday from the 21st to the 23rd, so the Tokyo market is closed.
On the 18th, it rose to 158.05 yen, but then plunged as the view spread that the Bank of Japan had conducted a rate check.
That caution that ‘the authorities are watching’ hasn’t disappeared yet.
The Minkabu article on the 21st also summarized it as ‘hard to lean either up or down.’
On the upside, there’s the fear of intervention.
On the downside, the interest rate gap won’t narrow.
Caught in this pincer, even with the downward pressure of falling crude oil prices, the price range ended at just 36 sen.
It wasn’t quiet because there were no factors.
It was just that no effective factors had arrived yet.
What should we be watching going forward?
I won’t make price predictions.
I’ll just list the things to watch.
・The US-Japan summit on the 22nd (US time). Whether anything is said about exchange rates. ・On the same day, the 22nd, President Trump is scheduled to discuss the Iran situation with leaders of Gulf nations. Crude oil might move again. ・The US PMI flash report on the 23rd. Whether the 2-year note moves based on economic figures. ・The US-China summit and Swiss monetary policy announcement on the 24th. ・Price movements when Tokyo reopens on the 24th.
What I especially want to see is whether the 2-year note follows if crude oil moves another step.
This time, only the 10-year note reacted.
If the 2-year note moves along with it next time, that would mean the Fed’s rate hike outlook has been shaken.
For the dollar-yen, that would be a much heavier issue.
Conversely, if only the 10-year note moves again, there’s a possibility it won’t be as effective as the headlines suggest, just like this time.
The news tells you to watch crude oil.
What the price was watching was the 2-year note.
That’s all for today 😭
※Investment decisions are at your own risk. I won’t say which way it’s going.
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