Market focus is shifting towards the major events scheduled for the latter half of next week. Following the US Consumer Price Index (CPI) on the 13th, the results of the US Federal Open Market Committee (FOMC) meeting will be announced on the 14th (early morning of the 15th in Japan), the European Central Bank (ECB) monetary policy decision will be announced on the 15th, and the Bank of Japan (BOJ) monetary policy meeting will take place on the 16th. These events pose significant risks for market volatility, particularly for USD/JPY, given the potential impact from both the FOMC and BOJ meetings. The short-term volatility for USD/JPY is currently around 12%.
In yesterday’s NY market, the US dollar reacted sharply to a higher-than-expected increase in initial jobless claims, indicating a downward bias in the USD. This week, the USD market has been mixed, but signs of a downward trend are starting to emerge. Other than the release of Canada’s employment statistics today, there are no major economic indicators scheduled. Expectations for the upcoming FOMC meeting lean towards a status quo. Additionally, the stabilization of risk sentiment in the stock market and elsewhere has reduced the pressure for risk-averse USD buying. The market will be watching to see if the downward pressure on the USD continues in the following overseas sessions.
The economic indicators to be released in the upcoming overseas sessions include Turkey’s industrial production index for April, Canada’s employment statistics for May, and Canada’s capacity utilization rate for the first quarter of 2023. Of particular interest will be Canada’s employment statistics. The unexpected rate hike by the Bank of Canada in recent days is still fresh in memory. The guidance for future policy actions has been ambiguous, and today’s employment statistics could provide some hints. It will be important to monitor whether the effects of the previous rate hikes are reflected in the labor market.
In terms of speaking events, speeches and participation in events by ECB Vice President de Guindos, Bank of Spain Governor de Cos, and Governor of the Bank of Portugal Centeno are scheduled. Market expectations currently lean towards a pause in additional rate hikes following the rate increase in June-July.
Recently, there has been a correlation between CAD and USD movements. Therefore, the results of Canada’s employment statistics will be crucial. It is expected that significant market movements may follow the release of this data.
