The Tokyo market saw a prevailing trend of yen selling. The announcement of Japan’s real wages being negative for the 15th consecutive month in the morning has contributed to speculation of continued easing by the Bank of Japan. However, there also seem to be risks regarding the sustainability of the yen’s depreciation.
It has been reported that credit rating agency Moody’s is considering downgrading six US banks, including US Bancorp, BNY Mellon, and State Street, during the Tokyo morning session. Downgrades have also been applied to ten smaller banks. The reaction of foreign investors to this news that evokes renewed financial uncertainty is uncertain. There is a likelihood that risk-averse behaviors like dollar and yen strengthening could take precedence.
The just-released final figures for Germany’s July Consumer Price Index (CPI) were unchanged from the preliminary figures. However, with year-on-year changes of +6.2% and +6.5% (EU-standard) compared to the expected +3.3% for the US Consumer Price Index this week, it still remains at a relatively high level. The fact that there is observed euro buying reaction is also noteworthy. During the early London session, the results of the ECB Consumer Expectations Survey will be announced.
Upcoming economic indicators from the international markets include the US Trade Balance (June), Canada’s International Merchandise Trade (June), and US Wholesale Inventories (Final) (June). The US trade deficit is expected to be around $650 billion, showing a decrease from the previous $690 billion deficit.
Regarding speaking engagements, Philadelphia Federal Reserve President Harker will deliver a speech on the economic outlook, and Richmond Federal Reserve President Barkin will speak at the event “Revisiting Economic Recession.”
There’s a stronger-than-expected USD appreciation. Tonight, with the downgrading of ten small US banks, it’s anticipated that selling pressure on US stocks will increase again. The focus will be on how the foreign exchange market reacts to this decline.