At the beginning of the week, there are no prominent catalysts in sight. It seems that the market is likely to continue the sentiment from last week following various events. The most recent event was the US employment data released at the end of last week. Job growth slowed down, the unemployment rate unexpectedly rose, and wage growth remained subdued. There were no apparent factors in the market that would lead to additional US rate hikes; instead, speculation about the timing of rate cuts starting next year was brought forward. Alongside the decline in US Treasury yields, the US dollar saw increased selling pressure. It appears that this trend will be carried forward initially.
Furthermore, the Bank of Japan (BOJ) continues to maintain its accommodative stance. The BOJ’s summary of discussions confirmed that negative interest rates and Yield Curve Control (YCC) will persist as long as there is no change in the outlook for prices and wages. This serves as a catalyst for a resilient selling pressure on the yen. The USD/JPY has seen a temporary halt in its decline, while the cross-yen pairs have shown renewed momentum towards yen weakness.
Over the weekend, ECB President Lagarde reaffirmed a strong commitment to achieving the inflation target by 2025. This suggests the possibility of a rate hike depending on the circumstances. This could potentially put upward bias on the euro.
As for economic indicators scheduled for release in the overseas markets later on, there are reports such as Germany’s manufacturing new orders for September, the final readings of non-manufacturing PMIs for Germany, France, and the Eurozone for October, and Canada’s Ivey Purchasing Managers’ Index (PMI) for October. These reports are not expected to be significant market drivers, and market reactions are likely to be limited.
Currently, buying interest is accumulating in EUR and GBP. I plan to take advantage of this if the timing aligns.
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