Forex Top Team

Today, the focus is on the US Producer Price Index (PPI) and the ECB Governing Council announcement, which may clarify the trend for the USD.

Yesterday, following an upside surprise in the US Consumer Price Index (CPI), there was a significant surge in USD buying. USDJPY clearly rose above the 152 yen level and extended to the 153 yen level. Currently, it’s facing some selling pressure around the 153 yen level but hasn’t experienced significant downside. Meanwhile, EURUSD dropped to the mid-1.07 level, GBPUSD to the mid-1.25 level, and EURJPY and GBPJPY also declined. The yen only weakened against the dollar; in cross-yen pairs, there was even a yen strengthening trend. This may have made it difficult for the Japanese government and the Bank of Japan to intervene by buying yen. However, it’s important to keep in mind that if there’s a significant buildup of positions leading to another USDJPY rally, intervention might still occur (when least expected).

In the upcoming foreign markets, attention will be on the ECB Governing Council announcement and the US Producer Price Index (PPI). Regarding the ECB Governing Council, officials have hinted at the possibility of starting rate cuts in June, pending confirmation that recent wage increases have stabilized. The market consensus is for the policy rate to remain unchanged at this meeting. Investors will be closely watching for hints regarding the start of rate cuts during the statement or Lagarde’s press conference.

As for the US Producer Price Index, whether it complements the upside surprise seen in yesterday’s US Consumer Price Index is crucial. Market consensus expects a year-on-year increase of +2.2% compared to the previous +1.6%, and the core year-on-year is also expected to rise from the previous +2.0% to +2.3%. The market is likely to react sensitively to any deviation from these expectations. Given the rapid USD buying following yesterday’s US Consumer Price Index, some correction can be expected. However, if the results are in line with expectations, renewed USD buying pressure is anticipated.

Apart from these, the only other economic indicator scheduled for release in the foreign markets is the US Initial Jobless Claims. Additionally, there are several emerging market-related indicators such as the South African Business Confidence Index (March), South African Manufacturing Production (February), Brazilian Retail Sales (February), and Mexican Industrial Production Index (February).

In terms of speeches and events, the focus will be on ECB President Lagarde’s press conference, along with speeches and participation in debates by other officials such as NY Fed President Williams, Richmond Fed President Barkin, Boston Fed President Collins, and Atlanta Fed President Bostic. Paying attention to the latest interest rate outlook following the recent US price statistics is advisable. Other events include the UK Bank of England Credit Conditions Survey, a speech by BoE committee member Green, the US 30-Year Bond Auction ($22 billion), and the OPEC Monthly Report.

Firstly, attention will be on the US Producer Price Index (PPI)to gauge the USD flow again. Subsequently, focus will shift to ECB President Lagarde’s press conference, although it’s important to note that her conferences tend to cause significant fluctuations, so it’s crucial to remain cautious and not be swayed too easily.