The yen edged lower in Tokyo trading on the 5th, hovering around 157.63–66 per dollar as of 5:00 p.m. JST. Uncertainty over the Middle East keeping crude oil prices elevated, persistent expectations for higher U.S. interest rates, and political and fiscal concerns in France all prompted yen selling and dollar buying. The yen extended gains against the euro, briefly touching around 176.25 per euro—its strongest level since November 2025. The euro fell for an eighth straight session against the dollar, pressured by France's fiscal woes. Separately, TDK announced it has developed an ultra-thin mirror for retinal projection and will showcase a smart glasses prototype at CEATEC.
The yen edged lower in Tokyo foreign exchange trading on the 5th. As of 5:00 p.m. JST, the Japanese currency was trading at 157.63–66 per dollar, down 6 sen from the same time the previous weekend. Crude oil prices remained elevated amid uncertainty over the Middle East outlook, fueling speculation that Japan's trade balance would deteriorate and prompting yen selling and dollar buying. Persistent expectations for higher U.S. interest rates and political and fiscal concerns in France also weighed on the yen.
Crude oil futures held firm at elevated levels. Yemen's Iran-aligned Houthi militant group reportedly attacked the Saudi capital Riyadh and facilities belonging to state-owned oil company Saudi Aramco in the country's eastern region on the 4th. With no clear timeline for normalization of crude supply, U.S. crude futures traded around $90 per barrel during Japanese trading hours on the 5th. In France, mounting political and fiscal anxieties drove buying of the dollar, the world's primary reserve currency, further pressuring the yen.
The September U.S. Employment Report released on the previous Friday (the 2nd) showed nonfarm payrolls grew far less than market expectations. The September unemployment rate rose, and average hourly wage growth also came in below forecasts. While expectations that the Federal Reserve would implement an additional rate hike in October receded, the view that further tightening would occur before year-end remained firmly entrenched.
The yen extended gains against the euro. As of 5:00 p.m. JST, the Japanese currency traded at 176.52–55 per euro, up 91 sen against the common currency. Shortly after 3:30 p.m., the yen briefly touched around 176.25 per euro—its strongest level against the euro since early November 2025. Euro weakness against the dollar spilled over into the euro-yen cross.
The euro fell for an eighth consecutive session against the dollar. As of 5:00 p.m. JST, the common currency traded at $1.1199–1.1200, down $0.0061 on the day. Selling pressure on the euro dominated amid France's fiscal and political uncertainties.
U.S. Employment Report and Fed policy outlook
The September U.S. Employment Report came in far weaker than market expectations, with nonfarm payrolls increasing by just 29,000 from the previous month. Markets had expected a gain of 84,000. The unemployment rate rose, and average hourly wage growth also undershot forecasts.
Following the release, expectations that the Fed would proceed with an additional rate hike in October receded sharply. According to CME's FedWatch tool, the probability of rates being held steady in October surged to 78%, up from 36% just one week earlier. However, markets are still pricing in a December hike and two additional hikes in the first half of 2027.
The 10-year U.S. Treasury yield traded around 5.26%, having briefly hit a 24-year high last week. As a global bond selloff pushes borrowing costs to multi-decade highs, investors are wary of persistent inflation risks tied to elevated oil prices and deteriorating fiscal positions across major economies.
Euro weakness and France's fiscal anxieties
The euro's decline has been a primary driver of dollar strength. The common currency has fallen for four consecutive weeks against the dollar, briefly touching around $1.116 on the 5th—its lowest level since May 2025. Concerns over France's debt levels and political gridlock ahead of next year's elections have pressured the single currency.
The selloff in French government bonds has also raised concerns about contagion across European markets. The yen has been caught in the crosscurrents: while it has strengthened against the euro, the dollar-buying flow stemming from euro weakness has weighed on the Japanese currency against the greenback.
TDK develops prototype of retinal-projection smart glasses
In the technology sector, TDK announced it has developed a prototype of smart glasses (spectacle-type device) that project images directly onto the retina. The device incorporates a proprietary mirror that can be embedded in the lens, and will be exhibited at CEATEC, the digital technology trade show opening on the 13th.
The newly developed optical component, called a "meta-optics mirror," is just 150 nanometers thick and boasts 80% transmittance of visible light. Because images are projected onto the retina, users can see clear visuals regardless of their visual acuity. According to the company, this is the world's first demonstration of a retinal direct-drawing display using such a mirror.
Conventional retinal-projection smart glasses required a large curved mirror positioned in front of the eye, creating issues such as obstructed vision and compromised design aesthetics. The meta-optics mirror achieves the same function as a curved mirror in a flat form factor. Nano-scale reflectors arranged on the surface finely control the direction of light reflection at each location, guiding laser light entering from various angles toward the retina.
TDK positions this technology as a high-growth application within the AI ecosystem it is prioritizing. The company has previously developed the world's smallest-class "ultra-compact full-color laser module (FCLM)" and a "visible-light full-color laser control device" enabling 4K-resolution imagery as key components required for retinal direct drawing.
TDK is also advancing external collaborations. The company has entered into a business partnership agreement with QD Laser to develop a display system for smart glasses that combines QD Laser's retinal projection technology with TDK's laser light sources, control devices, and the newly developed meta-optics mirror. The current system displays in monochrome, with full-color demonstration and mass production targeted within a few years.
Cost advantages are also highlighted. While conventional waveguide-type displays are structurally complex and expensive, the meta-optics mirror can leverage semiconductor-like manufacturing processes, making it easier to contain costs at scale.
In Tokyo trading on the 5th, the yen briefly weakened to around 158.06 per dollar during the morning session. Dollar buying dominated ahead of the mid-price fixing around 10:00 a.m., with speculation of yen selling and dollar buying by Japanese importers contributing to the yen's decline. However, once the fixing-related flows subsided, yen buying and dollar selling for position adjustments emerged, and the Japanese currency rebounded at times.
