October trading has commenced, and so far, there’s been no change in the dollar’s strength. USD/JPY continues to inch closer to the 150 yen level. For USD/JPY, the recent rise in long-term bond yields to their highest levels in a decade acts as a headwind. However, the Bank of Japan has already announced additional operations, trying to control market movements. EUR/USD is trading around the 1.05 range, and GBP/USD is testing lows around 1.21, as it has been since last week. Today, the AUD/USD is showing some weakness, with moments where it broke below 0.64. For the Australian dollar, the upcoming Reserve Bank of Australia meeting could lead to pre-event adjustments.
From a fundamental perspective, the avoidance of a U.S. government shutdown over the weekend is seen as good news. Additionally, China is in a major holiday period, leading to increased consumer expectations. The Chinese PMI released over the weekend exceeded expectations. Today, the Bank of Japan’s Tankan Survey has shown signs of improvement. On the other hand, the World Bank has downgraded its global economic outlook for this year and the next. In a market with many Asian exchanges closed, the Nikkei Average reversed its substantial morning gains to close down 97 yen, marking the third consecutive decline.
In the foreign markets later today, key economic indicators include the manufacturing PMIs for Germany, France, the Eurozone, the UK, and the US (September), Switzerland’s retail sales (August), and PMI (September), the Eurozone’s unemployment rate (August), US construction spending (August), and the ISM Manufacturing PMI (September).
Today, pay attention to the movement following the release of the US ISM Manufacturing PMI for September.