The Dollar-Yen pair has been gradually climbing day by day. Particularly during the transition between the London and New York markets, as well as during Tokyo’s mid-morning fixing time, there seems to be a tendency for yen selling. After briefly reaching the 145 yen level yesterday, today the pair is testing the mid to lower 145 yen levels. However, there is resistance around the mid-145 yen level where selling orders are capping the ascent. Speculations of stealth intervention by foreign actors have also arisen.
In the afternoon, Finance Minister Suzuki reiterated comments that have been repeated previously, stating, “We want to respond appropriately to excessive movements, take appropriate measures if speculative activities occur, and observe the forex market with a high level of vigilance.” This statement is being made in a situation where the pair has firmly touched the 145 yen level.
In terms of fundamental disparities, today’s higher-than-expected GDP figures from Japan should logically have resulted in yen appreciation, but this hasn’t been the case in practice. The Dollar-Yen rise is attributed not only to dollar strength but also yen weakness. It seems that foreign actors are very aware of the Bank of Japan’s strong commitment to continued easing. Additionally, the UK employment statistics released at 3 PM showed an acceleration in average weekly earnings growth. The market has fully priced in a 25 basis points rate hike by the Bank of England in September. Expectations of widening interest rate differentials between Japan and the UK are pushing up GBP/JPY, adding to yen-selling pressure.
Upcoming economic indicators in the international markets include US Retail Sales (July), US Import Price Index (July), US Export Price Index (July), and the New York Fed Manufacturing Index (August) at 9:30 PM (Japan time). At the same time, Canada’s Consumer Price Index (July) and Manufacturing Sales (June) will also be released. Following this, at 11 PM (Japan time), US Business Inventories (June) and the NAHB Housing Market Index (August) are scheduled to be announced. In the subsequent London market, at 6 PM (Japan time), the German ZEW Economic Sentiment Index (August) will be released.
In terms of speaking engagements, Minneapolis Federal Reserve President Kashkari will participate in a discussion during the New York morning session. For major US corporate earnings, this week sees a series of results announcements from retail companies. Today, Home Depot’s results are particularly anticipated.
Pay attention to the movements following the release of July US Retail Sales data. We should observe the subsequent flow of USD. However, USD/JPY is experiencing quite a nervous environment, so entering positions in EUR/USD or other currency pairs might be more suitable, as anticipated.
