Forex Top Team

Bank of Japan announces continuation of easing, pay attention to US PCE deflator after this

At the attention-grabbing decision-making meeting of the Governor of the Bank of Japan Ueda, he announced that the current ultra-loose policy would be maintained. Among them, we have deleted the forward guidance wording on interest rates, deleted the reference to the new corona, and decided to conduct a multilateral review (inspection) of monetary policy management over a year to a year and a half. The market is giving the impression that there will be no change in the monetary easing policy for at least a year. In overseas markets after this, attention will be paid to movements in the yen exchange rate based on Governor Ueda’s press conference.

After the fluctuations in the yen exchange rate have run its course, it is likely that the next focus will shift to the US economic statistics. Today’s US employment cost index (first quarter), US personal income and spending (March), US PCE deflator (March), US Chicago Purchasing Managers Index (PMI) (April), US Michigan consumer Confidence index (confirmed figures) (April) and others are scheduled to be announced. Markets are likely to react sensitively to inflation indicators ahead of next week’s US FOMC meeting. Yesterday, both the headline and core GDP deflators outperformed, prompting dollar-buying reactions. The PCE deflator for March and the employment cost index for the first quarter are likely to attract more attention today. For the dollar-yen exchange rate, it is possible that upward pressure will increase from both the yen’s depreciation and the dollar’s strength.

There are also many other economic indicators scheduled to be announced at the end of the month. Swiss retail sales (March), KOF Swiss leading index (April), French consumer price index (preliminary) (April), German employment statistics (April), German real GDP (preliminary) (2023 1st Quarter), Eurozone Real GDP (Preliminary) (1st Quarter 2023), German Consumer Price Index (Preliminary) (April), Brazil Unemployment Rate (March), South Africa Trade Balance (March), Mexico Preliminary GDP figures (first quarter), Canada’s real GDP (February), etc.

Significant depreciation of the Japanese yen. Until now, the Japanese government has been bought several times for risk aversion, but this time it was decided that “a multifaceted review (inspection) of monetary policy management will be conducted over a period of one to one and a half years.” , Impression that there is no change in the relaxation posture for the time being.

In the future, we plan to target the sale of the Japanese yen as it may become a trend.

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