The start of the week in the markets has been relatively quiet. The yield on the US 10-year Treasury bond has risen to around 4.988%, approaching the key level of 5%. Despite pressure on the US dollar, currency market movements have remained limited. EUR/USD is trading in the mid-1.05s, while GBP/USD is hovering around the mid-1.21s, staying within the range established since the end of last week. The battle around 150 yen for USD/JPY seems to be quietly ongoing. In the early morning of the week, it briefly rose to around 150.11, but the buying momentum has not picked up, and it has retreated to the 149.80-90 levels.
US financial officials have entered a blackout period ahead of their speeches. The same is true for ECB officials ahead of the ECB Governing Council meeting scheduled for this Thursday. Clues related to interest rates will rely on economic statistics. However, there are few notable data releases today. The Eurozone Consumer Confidence Index (flash) for October will be released around 11:00 AM Japan time.
This week, economic events will be concentrated on the 26th. For the Eurozone, the results of the ECB Governing Council meeting will be announced. The market views the previous 25bp rate hike as a precautionary move, and the prevailing expectation this time is for no change. In the US, the third-quarter GDP flash estimate, initial jobless claims, wholesale inventories (flash), durable goods orders (flash), and existing home sales will be released. The US GDP flash estimate is expected to show a +4.3% QoQ annualized growth, double the pace of the previous +2.1%. It is expected that market trends based on fundamental materials will emerge.
The situation in the Middle East continues to be in a standoff, and progress in humanitarian measures is eagerly awaited. However, the risk of accidental clashes is ever-present, and tension is likely to persist.
USD/JPY continues to trade nervously, but breaking into the 150 yen range is a matter of time. However, even if it enters the 150 yen range, the potential for further upside appears to be limited, making trading challenging.
Considering the situation in the Middle East, it might be prudent to focus on buying GOLD and CHF. Nevertheless, it appears that money is flowing into cryptocurrencies as well. Therefore, considering investments in cryptocurrencies like Bitcoin could be another option to consider.
