Will the Dollar Strength Continue? Monitoring the BOJ Governor’s Press Conference and the U.S. PCE Deflator
Market Outlook: In the overseas market, there is keen interest in whether the dollar’s upward trend will continue through October. With the upcoming U.S. employment report and next week’s presidential election, there is a high likelihood of dollar adjustments. As the end of the month approaches, the market is expected to show nervous movements influenced by capital flows.
BOJ Meeting and Governor Ueda’s Comments: In today’s BOJ meeting, the decision to maintain the policy rate was in line with expectations. The statement indicated that the BOJ would “carefully monitor overseas economic trends and financial markets, including those in the U.S.” However, it also noted that “upside risks to the inflation outlook are significant for FY2025,” impacting the yen’s exchange rate. Specifically, Governor Ueda’s comment that the phrase “there is ample time” was unnecessary has led to an increase in yen buying.
Focus on U.S. Economic Indicators: After the market digests the BOJ-related developments, attention will likely shift to U.S. economic indicators. The major indicators to be released today include:
PCE Deflator (September): Expected to show a year-on-year increase of +2.1%, with the core rate at +2.6%, indicating a slight slowdown in growth.
Initial Jobless Claims: Projected at 230,000, representing a slight increase from the previous week’s 227,000.
Unless the PCE deflator deviates significantly from expectations, market reactions to these indicators are likely to remain limited.
Other Economic Indicators and Earnings Reports: From the Eurozone, the Eurozone HICP flash estimate and unemployment rate are also scheduled for release, while U.S. earnings reports from companies like Uber, Apple, and Amazon are expected to attract attention.
Trading Strategy: Currently, yen buying is dominant due to Governor Ueda’s comments. Meanwhile, the dollar is likely to face adjustment selling as the market has already priced in expectations of a Trump victory. After the release of the U.S. PCE deflator, I plan to assess market movements and follow up with dollar selling.
