At the beginning of the week, the Oceania/Tokyo market has started trading after last weekend’s dollar-selling activity has paused for the time being. However, the dollar-yen exchange rate, which fell sharply from around 146 yen to the 138 yen level in the second half of last week, did not reach 140 yen at the beginning of the week, although it rebounded. It looks like it’s still trending downwards.
Today, only the Eurozone Industrial Production Index (September) will be announced, and no outstanding economic statistics are scheduled to be announced. Last week, the growth of the US consumer price index fell short of market expectations, causing strong dollar selling, but what about this week? The US Producer Price Index will be released tomorrow, US retail sales will be released the day after tomorrow, and the number of US second-hand home sales will be released at the end of the week. According to advance forecasts, the producer price index is expected to slow down slightly from the previous survey, while retail sales are expected to rise from the previous survey. Second-hand home sales are expected to slow considerably.
In addition, the pound exchange rate is likely to be the focus of attention as the counterpart currency for the dollar this week. A series of UK price data will be released on Wednesday. Headline growth in the consumer price index is expected to accelerate both month-on-month and year-on-year. The producer price index is expected to slow down the acceleration of inflation, but the retail price index is expected to accelerate further. If the result contrasts with the US price trend, there is a high possibility that the pound will be bought and the dollar will be sold. On the 17th, the Sunak British government will be inaugurated and a medium-term financial plan will be announced. It has been reported in advance that the government will consider raising the maximum income tax rate, which is the complete opposite of the previous Truss administration. There is a question mark as to whether confidence in the British economy can simply be obtained. How will the market react?
Currently, Chinese stocks continue to trend steadily. Amid reports of the spread of the new coronavirus, there seems to be a growing speculation that the Chinese government is seeking to break away from its zero-corona policy in a targeted manner. Today, expectations for large-scale real estate support measures are spreading, and real estate stocks are soaring in the Hong Kong and Shanghai markets. Semiconductor-related stocks also appear to be doing well. The yuan’s appreciation and the dollar’s depreciation are intensifying, supporting the dollar-selling pressure from the side.
The US dollar selling trend is likely to continue, but today we assume that it will be easy to buy back to some extent due to the thorough sell-off of the US dollar last week. Today, I am temporarily thinking of buying the US dollar.