The market has almost completely factored in the rate hike of 25 basis points at the February US FOMC meeting. The lack of volatility in the market appears to have contributed to the stabilization of risk dynamics. In the foreign exchange market, the flow of risk appetite, such as the depreciation of the yen and the depreciation of the dollar, continues.
However, among them, the strength and weakness of each currency are attracting attention. One hint would be a comparison with the extent of rate hikes with the US and the stance of continuing rate hikes in the future. For example, the ECB has indicated the need to raise interest rates by 50 bp multiple times in the future, and it is likely to become euro buying and dollar selling pressure. On the other hand, the Bank of England’s interest rate hike is expected to settle at 25 basis points, partly due to the recent slump in economic indicators. The situation invites euro buying and pound selling.
As for Oceania’s currencies, it has been pointed out that the stance of continuing interest rate hikes in the future may be prolonged, as indicated by today’s upswing in Australian inflation indicators. The Australian dollar has performed strongly against each major currency. As for the Bank of Japan, pressure on yen depreciation is prevailing, partly because the YCC fluctuation range was left unchanged at the most recent policy meeting. However, there are concerns that the yen exchange rate may become unstable again depending on the exit strategy, such as the appointment of the next president.
The Bank of Canada will announce its policy interest rate today. The market expects the Fed to settle for a 25 basis point hike. Against the dollar, the situation is likely to be basically neutral. The Canadian dollar is likely to react to the strengths and weaknesses at the press conferences of Bank of Canada Governor Macklem and Senior Vice Governor Rodgers.
Today, the Australian consumer price index (CPI) was higher than expected, leading to large AUD buying. I am thinking from a buying point of view.