Yesterday in the NY market, the strengthening of the dollar paused. This reaction was due to the preliminary April PMI values for both manufacturing and non-manufacturing sectors showing weakness. This contrasts with the relatively strong PMI preliminary values from the UK and the Eurozone, leading to a sell-off of the dollar. Some European financial authorities have indicated an early start to rate cuts. However, concerns about the timing differences with U.S. financial authorities remain, and while exchange rates are not the target, the impact of a weaker national currency on inflation trends is still a concern. It seems that this concern was somewhat alleviated by yesterday’s PMI data. The Dollar Index is currently below the 10-day support line.
Meanwhile, USD/JPY stubbornly aims higher. Close to the 155 yen level, which is significant due to potential government and Bank of Japan intervention, the price movement is extremely slow. Recently, it updated its 34-year high in the 154.90s range, continuing to set new highs daily. Ahead of Friday’s Bank of Japan policy meeting, the market is primarily driven by the US-Japan interest rate differential. The extent of the inflation forecast revision in the upcoming outlook report is a point of focus. Governor Ueda’s press conference is likely to grapple with the balance between financial policy normalization and an easing stance.
Upcoming international market economic indicators include U.S. durable goods orders (preliminary for March), Canadian retail sales (February), and more. Depending on the outcomes, these indicators could potentially impact each country’s central bank’s rate cut expectations. The German Ifo Business Climate Index is forecasted at 88.8, an improvement from the previous 87.8. U.S. durable goods orders are expected to accelerate growth to +2.5% month-over-month, up from the previous +1.3%. Canadian retail sales are expected to improve to +0.1% month-over-month from the previous -0.3%, although core retail sales growth is expected to slow to +0.1% from the previous +0.5%.
Regarding speaking events, speeches and event participations by a series of ECB officials including De Cos, Governor of the Bank of Spain, Nagel, President of the Bundesbank, Villeroy de Galhau, Governor of the Bank of France, and Cipollone, a member of the ECB, are scheduled. Canadian central bank meeting minutes (April 10th session) will be published during NY hours. U.S. weekly crude oil inventory statistics will also be released. Many corporate earnings are scheduled, including IBM, Meta Platforms, AT&T, Biogen, Boeing, Ford, and others.
USD/JPY is approaching the 155 yen range, yet no intervention from the Bank of Japan has occurred. Today’s movement in the Japanese yen is worth watching. Anticipating intervention, the CADJPY sell position is being maintained.
The expected movement will likely occur after the U.S. durable goods orders release.
