Dollar buying pressure continues. The dollar has risen to the upper ¥139 level, approaching the ¥140 level. 70% of the market expects the U.S. FOMC to leave interest rates unchanged at the June meeting, with the remaining 30% of the market persistently expecting a rate hike. The U.S. monetary authorities have denied market speculation that they will begin raising interest rates before the end of the year. In addition, it appears that the dollar is being bought on the back of risk caution along with falling stock prices.
Talks between the U.S. government and the Republican Party have been difficult, with the X-Day on the U.S. debt ceiling issue just one week away. While various statements have been made in the political gamesmanship, there are no signs of a conclusion. The situation is also disturbing, with rating agencies suggesting downgrades.
On the other hand, the Nikkei 225 is rising again. There are widespread speculations of eliminationist buying of Japanese stocks by foreign investors. With the Bank of Japan stubbornly maintaining its accommodative policy, there is persistent pressure on the yen to weaken due to the widening interest rate differentials between Japan and the U.S. and other countries, as well as rising stock prices.
The first-quarter GDP report for Germany released just a few minutes ago was revised downward to -0.3% y/y. This is the second consecutive quarter of negative growth. This is the second consecutive quarter of negative growth, and the country is now in a winter recession. However, the euro sell-off reaction is limited at this point. The recession is expected to be avoided in the coming quarters.
Economic indicators to be released later in the day in overseas markets include South African producer price index (April), South African central bank policy rate (May), Turkish central bank policy rate (May), US initial jobless claims (05/14 – 05/20), revised US real GDP (Q1 2023), and US existing home sales contract index (April).
In terms of speaking events, there will be many opportunities for ECB officials, including ECB Vice President De Guindos, German Fed President Nagel, French Central Bank President Villeroy de Garaud, Portuguese Central Bank President Centeno, and Spanish Central Bank President De Costa, to make remarks. In the U.K., Bank of England Commissioner Haskell, and in the U.S., Federal Reserve Bank of Richmond President Barkin and Federal Reserve Bank of Boston President Collins are scheduled to speak and participate in events. The U.S. 7-year bond auction ($35 billion) will be held.
Today, ECB officials are expected to speak at a number of events, and the EUR is likely to move in response to their comments.
