The market is concerned about the upcoming US debt ceiling deadline, scheduled for June 1st, and the lack of progress in negotiations between the US government and the Republican Party. Market sentiment, however, does not appear to be overly pessimistic. The strong performance of the Nikkei Average is particularly notable, with increased attention from foreign investors. The USD/JPY exchange rate is also stable, with movements targeting the key level of 140 yen. Additionally, there have been positive evaluations of the Kishida administration at the Hiroshima G7 summit and an increase in public support according to opinion polls.
On the other hand, speculations about a pause in interest rate hikes at the June FOMC meeting in the US, which had spread last weekend, have slightly weakened. The short-term financial market reacted sensitively to additional hints of rate hikes from hawkish members such as Chairman Powell. Today, the upward trend of the Nikkei Average has stalled, with the impact of semiconductor-related regulatory reports being cited.
Due to the recent decline in the Nikkei Average, the yen has gained strength, resulting in selling pressure on Oceanian currencies. Moreover, with the upcoming NZ Reserve Bank policy interest rate announcement scheduled for tomorrow, it may be difficult to enter positions in Oceanian currencies in the near future.
Today the US PMI data is expected, which could lead to significant movements in the USD afterwards.