Market Commentary
NZD and GBP Creating Downward Pressure on USD, But Dollar Remains Firm
Today, we are seeing some dollar weakness. The NZD is being bought after the Reserve Bank of New Zealand’s decision to keep the policy rate unchanged, accompanied by a hawkish statement. Additionally, the GBP has surged following the release of the UK Consumer Price Index for April, which came in at +2.3% year-on-year, surpassing the market consensus of +2.1%. In Japan, the yield on the 10-year government bond hit 1% for the first time since 2013, which has been a topic of discussion.
However, overall, the dollar’s movement has been limited to slight depreciation. USD/JPY is testing the upper limit in the lower 156 yen range. EUR/USD is also limited to modest movements in the mid-1.08 range, following GBP/USD’s rise. The Dollar Index remains in the 104 range, continuing from last week, indicating a pause in the dollar’s weakening trend.
In summary, while there are plenty of individual factors, the overall market trend has not strengthened. It appears that impactful materials originating from the US are still needed.
Upcoming US Economic Indicators and Events
In the upcoming overseas market, the following US-related economic indicators will be released:
MBA Mortgage Applications Index (May 11 – May 17)
Existing Home Sales (April)
Both indicators are related to the housing market. The MBA Mortgage Applications Index has shown positive numbers for two consecutive weeks due to the declining trend in US bond yields. However, with yields rising over the past two weeks, there are concerns that loan conditions might deteriorate again. As for existing home sales, the market consensus is 4.23 million units, slightly up from the previous 4.19 million units.
The market is likely to focus on the FOMC minutes later in the New York session. Recent comments from US financial officials have been cautious about early rate cuts this year. While there is consensus that the next action will be a rate cut, many believe that a period of holding rates steady will be necessary. If this view is clearly indicated, there could be upward pressure on the dollar.
Other key materials include:
US 20-year Bond Auction ($16 billion)
US Weekly Petroleum Status Report
Earnings reports from companies like NVIDIA, Analog Devices, Snowflake, and Target
Strategy for Today:
Focus on NZD and GBP. Plan to enter trades if opportunities arise.
