The dollar’s appreciation is getting stronger this week. The background is that the hawkish stance of the US financial authorities has been shown again. Fed director Brainard, who is believed to be dovish, said he would “shrink the balance sheet at a rapid pace in May,” inviting dollar buying. In addition, many members supported a one-time or more significant rate hike of 0.50% in the US FOMC minutes, and the upper limit of the reduction is $ 95 billion a month for the reduction of the balance sheet. The dollar rose further as US bond yields rose, as it was revealed that the US dollar was down $ 65 billion a month and the MBS was down $ 30 billion.
Eurodollar is 1.08 units, which is a heavy upside. In addition to being pushed by the strong dollar, the euro selling pressure is that the situation in Ukraine is showing no signs of improvement. The Russian side is sticking to seizing the eastern region and the Crimean Peninsula from Ukraine without breaking the traditional hard-line stance. The United Nations has locked Russia out of the Human Rights Council in response to Russian genocide. Europe has announced an embargo on Russian coal. The United States and others have suspended transactions with major Russian banks. Sanctions against Russia are painful, especially for Europe, but the mood is growing where human rights are prioritized over the economy.
The dollar yen seems to be waiting for sale at the 124 yen level, but the downward push is also limited. The continued rise in US bond yields is supporting the dollar-yen as the widening interest rate gap between Japan and the US. In the first half of the week, Governor of the Bank of Japan Kuroda said, “The fluctuations in the exchange rate this time are a little steep,” but the yen buying reaction in the market has temporarily stopped. I was impressed by the strong trend of yen depreciation and dollar appreciation.
Because today is Friday, it is easy to make adjustments in weekly transactions. However, there is a history that the hawkish stance of the US financial authorities has strengthened again this week, and the pressure to buy dollars seems to be deep-rooted.
I thought there was a slight rebound from the EUR due to concerns about inflation in the EU, but the upside continues to be heavy. However, since today is the weekend, it is assumed that it will be easier to buy back the EUR that has been sold so far.
