USD Strengthens as Dollar Buys Outweigh, Signs of Rebound from Adjustment Phase
Market Situation: Dollar Recovery Trend
After the dollar selling caused by month-end adjustments last week, dollar buying is now prevailing at the start of this week. USD/JPY, which dropped to the low 149 yen range last week, has bounced back to the mid 150 yen range today after being supported.
Key Focus:
- Trump Tariff Statements: Trump’s comments about imposing a “100% tariff” on BRICS countries have shaken the markets and reignited the “Trump trade”. Although the risk-off sentiment is limited, it is supporting the dollar buying trend.
- Political Uncertainty in France: Political instability surrounding the French budget proposal has raised concerns about potential coalition collapse and downgrade risks. This could strengthen EUR selling and USD buying.
- BOJ Governor’s Comments: BOJ Governor Ueda hinted at the possibility of early interest rate hikes, which the market interpreted as yen bullish. However, USD/JPY rebounded in the low 149 yen range.
- Economic Indicators Ahead of US Employment Data: Key employment-related indicators such as JOLTs job openings, ADP employment numbers, and initial jobless claims are in focus ahead of the weekend’s jobs report. The impact on the FOMC’s rate cut timing is also being closely watched.
Important Indicators Today:
- Manufacturing PMI (Various Countries): France, Germany, Eurozone, UK, and the US will release their final PMI readings. These will provide insights into manufacturing sector sentiment.
- US ISM Manufacturing PMI (November): Scheduled for release at 24:00 JST. This key indicator is expected to drive USD volatility.
- Other Indicators:
- UK Nationwide House Price Index (November)
- Eurozone Unemployment Rate (October)
- US Construction Spending (October)
Speech Events:
- Waller (Fed Governor) and Williams (NY Fed President) will be speaking, providing insights into the Fed’s monetary policy outlook.
- BOJ Bond Market Survey (November) will also be published.
Strategy and Outlook:
- USD/JPY: A confirmed rebound at the support line suggests an upward trend is being explored. Watch for movements targeting the mid 150 yen range, potentially towards 151 yen.
- EUR/USD: EUR/USD continues to explore lower levels, influenced by France’s political uncertainty and upcoming Eurozone data.
- GBP/USD: With weak UK economic indicators, opportunities for short-selling on any rebounds could emerge.
Focus Currency Pairs:
- Risk currencies like CAD and AUD are expected to move due to Trump’s comments. Maintaining a short bias on EUR and GBP due to their ongoing weakness is advised.
Upcoming Focus:
- After today’s US ISM Manufacturing PMI release , USD price movements are expected to be in focus. For short-term trades, it’s wise to wait for the indicator results to confirm the market direction before positioning.
