The Tokyo market is generally characterized by dollar buying pressure. With the rise in US bond yields, USD/JPY has climbed from around 146.40 to near 147 yen. Another significant move was observed in AUD/USD, which dropped from around 0.6460 to near 0.6380. Factors such as the deterioration of China’s Caixin PMI and the Reserve Bank of Australia’s decision to keep its policy interest rate unchanged have weighed on the Australian dollar. Speculation regarding the widening policy interest rate gap between the US and Australia seems to have spread. While USD/JPY, EUR/JPY, GBP/JPY, and others have been on the rise, AUD/JPY has moved counter to this trend, dropping below the 94 yen level. NZD/JPY has also experienced declines, falling to the mid-86 yen range.
However, attention is likely to shift to Euro-related matters in the upcoming London and European markets. In addition to Christine Lagarde, the President of the ECB, participating in a panel discussion, there are also scheduled speeches and event appearances by other figures such as Ignazio Visco, Governor of the Bank of Italy, Isabel Schnabel, ECB Executive Board member, and Luis de Guindos, ECB Vice-President. Divergent perspectives are expected to be presented, potentially including perspectives from hawks.
Given the abundance of ECB-related events, if expectations for a policy interest rate hold at the September meeting intensify, it’s likely that the Euro will weaken, and the dollar might exhibit relative strength.
The Euro is under selling pressure. Keep an eye on whether it breaches the 1.0700 level.
