Signs of a resurgence in dollar buying have recently been seen in price movements. The dollar index is showing signs of bottoming out, with the U.S. employment data again showing strength since the beginning of May, and the U.S. retail sales report released yesterday also indicating strong consumption. Although the rapid pace of U.S. interest rate hikes has triggered the collapse of some regional banks, the U.S. economy as a whole does not appear to be in a sobering state. As market sentiment calms down, the dollar seems to be gradually testing the upside.
In this context, it is important to keep in mind that the U.S. debt ceiling issue is still unresolved, and optimism that an agreement will be reached before the deadline is still wishful thinking. Once this issue is resolved, the market is expected to shift to a risk appetite, but it does not appear to be that time yet.
Economic indicators to be released later in the day include: Eurozone CPI (confirmed) (Apr), South African retail sales (Mar), US MBA mortgage applications (05/06 – 05/12), Brazilian retail sales (Mar), Canadian international securities turnover (Mar), and US housing starts (Apr).
In addition to the strong U.S. dollar, the Japanese yen is also noticeably weaker. This week, we assume that it will be easier to get price gains if the strong currency and the Japanese yen are involved.