Last week, the dollar market exhibited a turbulent state, gradually shifting towards a buying trend. This momentum has carried over into the beginning of this week’s trading. USD/JPY temporarily reached around 145.22, marking recent highs. EUR/USD hovered in the mid-1.09 range, while GBP/USD remained weighed down in the mid-1.26 range.
Amidst the crisis surrounding China’s real estate giant, Evergrande Group, Hong Kong and Shanghai stocks experienced declines. Currencies sensitive to risk sentiment and closely tied to the Chinese economy, like the Australian and New Zealand dollars (AUD and NZD), faced selling pressure. AUD/USD softened to the mid-0.64 range, and NZD/USD weakened to the mid-0.59 range, underscoring the prevailing trend of dollar strength. These currencies also faced selling pressure against the yen.
In the upcoming global markets, there are no scheduled economic indicators for the US, UK, Europe, or Canada. Only India’s trade balance and consumer price index for July are set to be released. Due to the summer holiday season, there are no significant scheduled speeches or events from major financial officials.
The USD/JPY market briefly touched the 145 yen level, a point reminiscent of last year’s intervention level by the Japanese government and the Bank of Japan to curb yen appreciation. There’s a sense of intervention vigilance among some market participants. While comments from Finance Minister Suzuki and others regarding exchange rates are anticipated, they might merely reiterate previous statements, leading to limited market reactions.
Tomorrow will bring a series of US economic indicators, including retail sales, NY Fed Manufacturing Index, import prices, and business inventories. Additionally, Canada’s consumer price index is set to be released. Until then, cautious trading focused on the movements of equities and bonds is likely to continue.
USD/JPY is displaying a nervous trend around the 145 yen level. A significant drop at this point could potentially trigger a rapid sell-off in the US dollar, possibly affecting other currency pairs as well. Pay close attention to price movements.