The dollar has strengthened further this week, but it has fluctuated nervously due to adjustments. The most volatile movement was the movement after the release of the US consumer price index on the 13th. Although the year-on-year rate of increase has slowed since the previous survey, the level of inflation exceeded market expectations. As expectations for a slowdown in inflation had risen in advance, the dollar/yen pair surged to a three-yen range. Subsequently, on the 14th, a series of measures to restrain the yen’s depreciation from the Ministry of Finance and the implementation of rate checks by the Bank of Japan pushed the yen back into the direction of appreciation by 2 yen.
However, this week’s series of US economic statistics did not show any change in the US Fed’s aggressive stance on interest rate hikes. U.S. yields rose, and the market is fully pricing in a 0.75 percentage point rate hike at next week’s FOMC meeting. Some speculate that the interest rate will be raised by 1.00 percentage points. Dollar pressure continues.
There are no notable US economic announcements scheduled today. At the end of NY, investment in US securities (July) will be announced. Fed officials’ remarks are also centered on Europe, and US Fed officials have entered a blackout period. It can be said that the material from the United States is almost ready until the FOMC.
The Tokyo market will be closed for three consecutive weekends. The question is whether the government and the Bank of Japan will respond if the dollar/yen pair approaches 145 yen again. Is it the speed of the 2-3 yen fluctuations in a few hours that is the problem with the Bank of Japan’s exchange rate check, or is the problem of the strong dollar and weak yen level of 145 yen? If you are a speculator, it is pointed out that it is possible to use a demanding market as a strategy to bring the market closer to 145 yen at a slow speed.
Buybacks are dominant in JPY. In response to the Bank of Japan’s warning of a weaker yen, it is assumed that the yen is likely to swing higher today.