Continued Ishiba Shock Market: Attention on Overseas Reactions as the Week Begins
Following the results of the LDP presidential election last weekend, the yen exchange rate experienced significant turmoil. With reports indicating that the economically expansionist Takaichi was in the lead, USD/JPY rose to the 146 yen level. However, when Ishiba unexpectedly won the runoff election, both yen appreciation and a sharp decline in stock prices occurred simultaneously, causing USD/JPY to plummet to the 142 yen range. The impact of the “Ishiba Shock” continues into the start of the week, with the Nikkei average closing down nearly 2,000 yen and USD/JPY entering the 141 yen range.
Chinese and Hong Kong Markets Surge in Contrast
In contrast, the Chinese and Hong Kong markets are experiencing a dramatic surge ahead of the National Day holiday. The Shanghai Composite Index has been soaring daily, recording an increase of over 8% today. The market is showing an enthusiastic response to the series of economic measures being announced.
Attention on European and London Market Movements
With such contrasting movements, the focus is now on how the European and London markets will react. Currently, U.S. stock futures and European stock futures are slightly lower, but there hasn’t been a sharp decline similar to that of the Nikkei average. Given the risk dynamics, there is a possibility that the yen’s appreciation may ease, and I intend to continue monitoring USD/JPY trends.
Upcoming Economic Indicators and Events
The following economic indicators are scheduled to be released today:
- KOF Swiss Leading Index (September)
- U.K. Consumer Credit Outstanding (August)
- U.K. Money Supply M4 (August)
- German Consumer Price Index (Preliminary) (September): Expected to slow to +1.7% YoY (previously +1.9%)
- South Africa Trade Balance (August)
- U.S. Chicago Purchasing Managers’ Index (PMI) (September): Expected to remain roughly unchanged at 46.0, compared to the previous 46.1
In terms of speaking events, Bowman from the Fed will be giving a lecture, ECB President Lagarde will attend the European Parliament, and Fed Chair Powell will speak at the National Association for Business Economics (NABE). A discussion featuring Green from the Bank of England is also scheduled.
Trading Strategy
Today, the surge in Chinese stocks is attracting buying interest in AUD. I plan to continue focusing on buying AUD/USD.
