Resumption of Dollar Buying Movement; This Week’s USD/JPY Influenced by the U.S. Fed and Presidential Election
Trends in USD/JPY
This week, dollar buying has gained momentum once again. In yesterday’s overseas market, the USD/JPY broke above the 150 yen level against the backdrop of rising U.S. bond yields, reaching as high as 151 yen in the Tokyo market. Over the past month, the dollar has appreciated more than 10 yen against the yen. There have been no strong comments from the government or the Bank of Japan to curb yen weakness, leading the market to show little concern about yen depreciation.
U.S. Data Supporting Dollar Strength
A series of U.S. economic indicators have come in better than expected, causing the outlook for U.S. rate cuts to diminish for the rest of the year. Additionally, cautious remarks from Fed officials yesterday regarding rate cuts have also contributed to supporting the dollar’s strength.
U.S. Presidential Election and Dollar Strength
The upcoming U.S. presidential election on November 5 is also contributing to dollar strength. Trump’s tariff policies and domestic tax cuts are seen as factors that could increase import prices and inflation risks. On the other hand, Harris’s policies could trigger demand inflation due to aggressive economic stimulus measures. Thus, regardless of which candidate appears to be favored, it seems likely that dollar buying will continue.
Upcoming Events and Indicators
Today’s key economic indicator includes the Richmond Fed Manufacturing Index for October, but there is a lack of materials that could significantly move the market. Additionally, Canada’s Industrial Product Price Index for September is scheduled to be released.
Remarks from Financial Authorities
Numerous remarks from financial authorities are scheduled in Europe and the UK. In particular, ECB President Lagarde’s discussions on Bloomberg TV and at the IMF-World Bank annual meeting are expected to be key events. Other central bank governors in Europe, including Bank of England Governor Bailey, are also set to participate in speeches and discussions.
Outlook for Dollar Buying
If European and UK central bank governors make dovish remarks, it could lead to relative dollar buying. The combination of Trump’s tariff policies and domestic tax cuts is expected to spur dollar buying, and if there are reports indicating Trump is favored in the presidential election, dollar buying may accelerate even further.
This week, the outcome of the U.S. presidential election and the Fed’s movements are expected to significantly influence the USD/JPY, necessitating cautious responses.
