The forex market this week has consistently seen yen appreciation. Following the weaker-than-expected U.S. Consumer Price Index (CPI), dollar selling has spread, and it is widely believed that the Japanese government and the Bank of Japan intervened by buying yen. Additionally, expectations of a rate hike at the BOJ Monetary Policy Meeting next week have further accelerated yen buying. This has led to a significant reversal of the previous yen depreciation trend.
Market attention has focused on comments from Digital Minister Kono and LDP Secretary-General Motegi, pressuring for a rate hike. This has prompted foreign investors to unwind yen carry trades. The yen appreciation trend has also impacted the stock market, with the Nikkei 225 recording a significant drop. Notably, semiconductor stocks have seen a sharp decline, and oil prices have also turned downward. The market as a whole appears to be in a phase of position adjustment.
The dollar index is currently losing direction, with the future outlook unclear. The focus is now on the U.S. GDP preliminary data for the second quarter, which is set to be released today. The forecast anticipates a +2.0% annualized growth rate, with expectations for increased personal consumption. However, a slowdown in the GDP deflator and core deflator is also predicted. Depending on the results, the uncertainty in the dollar market may deepen.
Other significant economic indicators include the German Ifo Business Climate Index, South African Producer Price Index (PPI), U.S. Durable Goods Orders, and U.S. Initial Jobless Claims. If the U.S. GDP data does not provide a clear direction, these indicators may become key factors for the dollar market.
Trading Strategy
Given the expectation that the yen buying trend will continue, the plan is to focus on trading cross-yen currency pairs. We will closely monitor market trends and respond cautiously.
