In the absence of Tokyo market activity on the vernal equinox, the dollar-yen is trading in the 151 yen range, the highest since November last year. The Bank of Japan’s announcement of easing interest rates has contributed to the depreciation of the yen, along with speculation about a delayed start to rate cuts at the US FOMC, suggesting that the period of enjoying the interest rate differential between Japan and the United States may continue.
Today, the most anticipated event is the US FOMC meeting, where interest rate policy is expected to remain unchanged. Among the focal points is the members’ interest rate outlook (dot plot). Given the recent persistent inflation trends, whether the expectation of three rate cuts within the year will decrease to two is likely to be the point of interest. In such a scenario, it is expected that the upward momentum of the dollar-yen will resume. It’s worth noting whether it will surpass the highs of last year and the year before around 151.90.
Regarding remarks related to the event, attention is drawn to the press conference by Powell, the Fed Chair. If market interest rate expectations are perceived to be biased, there might be attempts to correct them through statements. However, if one views the speculation about a delay in the timing of rate cuts as a correction of the excessive early rate cut expectations in the latter half of last year, the current market expectations may not be so biased, but it remains to be seen.
Additionally, Lagarde, ECB President, Lane, ECB Chief Economist, De Guindos, Governor of the Bank of Spain, and Schnabel, ECB Board Member, are scheduled to deliver speeches at the ECB Annual Event. We can expect discussions with participants such as Weidmann, President of the Bundesbank, and Villeroy de Galhau, Governor of the Bank of France. With many ECB officials scheduled to speak, it’s worth checking the differences in rate cut expectations among the US, UK, and Eurozone central banks. Furthermore, the minutes of the Bank of Canada meeting (held on March 6) and the US Weekly Petroleum Inventory Statistics are also scheduled.
Today, attention will be on Powell’s press conference We generally anticipate the continuation of a trend favoring USD purchases, but since some factors might already be priced in, attention will be on subsequent movements.
