Trading in overseas markets was quiet yesterday as the U.K. and U.S. markets were closed. Today, trading is likely to be more active as the U.K. and U.S. markets return to the market. The dollar is currently being bought.
However, the dollar-yen exchange rate has sharply declined by more than 50 sen from the highs after it was reported that the Ministry of Finance, the Financial Services Agency, and the Bank of Japan will hold an information exchange meeting, starting at 5:30 pm. The dollar-yen exchange rate is likely to be in a rough patch.
The dollar index is on an upward trajectory following a series of strong U.S. economic indicators released last week. The dollar is now at the 140-yen level, while the euro dollar is testing the downside to the 1.06 level. The dollar is now stronger across the board, including emerging market currencies such as the Turkish lira, yuan, and South African rand. Among major currencies, the dollar is predominantly stronger against the Australian dollar and the NZ dollar, followed by Nordic currencies such as the Norwegian krone and the Swedish krona.
About 60% of the respondents have factored in 25bp for the June U.S. FOMC meeting, and the expectation of a rate hike has prevailed over the past week. The U.S. employment data on Friday is awaited.
The March data is a little out of date, but the Case-Shiller home price index is expected to turn negative. The Conference Board Consumer Confidence Index (May) will also be released. The market forecast is around 99, which is expected to be lower than the previous reading.
In addition, ECB officials are scheduled to make a number of statements today. Speeches and events are scheduled by Bank of Lithuania Governor Shimkus, Bank of Austria Governor Holtzmann, Bank of Portugal Governor Centeno, and Bank of France Governor Bilrois de Garaud, among others. With the euro selling off at the moment, it will be interesting to see whether the hawkish members will repeat their stance of raising interest rates additionally, and if so, to see how the market reacts. In the U.S., Federal Reserve Bank of Richmond President Barkin will give a speech on monetary policy.
The Ministry of Finance, the Financial Services Agency, and the Bank of Japan will hold an information exchange meeting, and there is a sense of caution in the air as to whether they will once again try to halt the recent sharp depreciation of the yen. If this happens, the yen may not depreciate in a straightforward manner. The movement of the Japanese yen should be closely watched.
EURUSD is rebounding after falling below 1.0700. Unfortunately, buy orders were cut at a loss, but considering the month-end rebalancing, we believe it is easy to buy back into EUR. From here, we will go to buy EURCAD today.
