Yesterday’s lower-than-expected growth in the US consumer price index triggered a strong dollar-selling reaction. The year-on-year growth in both headline (overall) and core sales was lower than expected, amplifying the market reaction. The dollar/yen fell sharply from around 146 yen to the 140 yen level at one point, a range of about 6 yen. Euro-dollar and pound-dollar also showed a strong rise, but the cross-yen fell, indicating the strength of the move to liquidate the dollar-yen position. As for USDJPY pair, due to the impact of yesterday’s big market, the pair is currently holding down its topside at around 142.50.
The UK GDP will be announced today at 4:00 pm Japan time. The focus is September’s monthly GDP, which shows the latest economic situation. Continuing from the previous August, negative growth is expected. It will be interesting to see how the pound-dollar pair, which surged to the 1.17 level during yesterday’s weak dollar market, will react. If it becomes widely believed that the Bank of England does not have the capacity to raise interest rates to the level of the United States, selling pressure will likely come. However, in the short-term, the pound-selling side is in a tough situation due to the big market on the previous day, and it is likely that the pair will pick up the lower price.
China’s move to gradually ease its zero-corona policy is also attracting attention. Reports that China will shorten the quarantine period for those who have had close contact with the corona have prompted a strong yuan and strong Chinese and Hong Kong stocks. With the sharp rise in the US stock market yesterday, the market’s risk sentiment is recovering, and it is pointed out that the risk appetite of the dollar and the yen may weaken in the foreign exchange market as well.USDJPY pair is likely to be heavily traded as it is often strongly influenced by trends in US bond yields, but the cross-yen pair is likely to show relatively docile movements in response to risk trends.
Currently, USDJPY has broken the support of 140 yen and is in the 139 yen range. Assumed to still update the lower price. The US dollar continues to sell today. However, since the volatility is also increasing, I would like to pay attention to the position size and loss cut width.