Today, the early morning earthquake in Taiwan served as a surprising piece of news. Given Taiwan’s association with major semiconductor companies like TSMC, semiconductor-related stocks were sensitively sold. However, the decline in Japanese stocks also seems to be largely influenced by fears stemming from the previous day’s downturn in U.S. stocks.
In the U.S., amid concerns over persistent inflation risks, speculation is spreading that the number of rate cuts within the year will decrease. U.S. long-term bond yields are reaching their highest levels since the beginning of the year, which is a headache for U.S. stocks due to the continued high-interest rate levels.
Amid a tug-of-war between risk aversion and observations of the interest rate differential between Japan and the U.S., the yen exchange rate is showing a hesitant trend. For USD/JPY, the psychological level capping the upside appears to be 152 yen, partly due to intervention concerns.
As more hints from U.S. economic indicators are needed, the U.S. employment statistics will be announced this weekend. It’s expected to have a strong influence on the future trends of U.S. bond yields and the dollar exchange rate. Ahead of this, today will see the release of the U.S. ADP employment report for March, the ISM Non-Manufacturing PMI for March, the MBA Mortgage Applications Index (03/23 – 03/29), and the final U.S. Manufacturing PMI.
In terms of speaking events, there are many scheduled appearances by U.S. financial officials. Speeches by Atlanta Fed President Bostick, FRB Governor Bowman, Chicago Fed President Goolsbee, Fed Chair Powell, Fed Vice Chair Barr, and FRB Governor Kugler are planned. The recent FOMC hinted at three rate cuts within the year, but it remains to be seen what today’s speakers will indicate.
Although the Eurozone consumer price index has fallen more than expected, there hasn’t been a move to sell the EUR, suggesting that this has already been factored in, with limited downward movement. If any news emerges that supports buying the EUR, it is presumed that there could be a significant influx of buying.
