In the New York market yesterday, the dollar saw increased selling pressure. The yield on the U.S. 10-year Treasury bond briefly reached 4% amid the upward trend since the end of last year but fell below 3.9% in the latter half of New York trading. The FOMC meeting minutes showed expectations for rate cuts by the end of the year, but some also suggested that interest rates might remain at the peak longer than expected. The market reaction seemed subd+65ued.
The drop in U.S. bond yields is believed to be due to adjustments ahead of tomorrow’s release of U.S. employment data, given the recent rise. Amid prolonged conflicts worldwide and concerns about the return of inflation risks, the rise in oil prices and other factors have been observed.
The dollar-yen exchange rate remains robust. In the early Tokyo market of the new year, it continued to rise above the 143 yen level. It has shown movements above the 21-day and 200-day moving averages, and the momentum of the dollar-yen exchange rate since the beginning of the year has been remarkable. The upward trend in U.S. bond yields has reignited the yen-dollar interest rate differential, despite Bank of Japan Governor Ueda’s uncertain monetary policy stance.
In the international markets, there is a relatively rich schedule of economic indicators to be announced later. Following the non-manufacturing PMI figures for December in Spain and Italy, final non-manufacturing PMI figures for December in France, Germany, the Eurozone, the UK, and the U.S. are set to be released. Excluding the UK and the U.S., the non-manufacturing PMIs of various countries are still below the 50 mark, indicating a judgment point for economic conditions. It will be essential to check how much improvement is shown.
In Europe, the preliminary consumer price index for December in Germany will also be announced. The market consensus forecast is +3.7% YoY (compared to +3.2% previously), and +3.9% YoY under EU standards (compared to +2.3% previously), both expected to accelerate from the previous month. Some voices point out the base effect of the low level of the previous year. However, the forecast also predicts a shift from a negative to positive month-on-month figure, warranting caution regarding the rise in inflation pressures itself.
In the U.S., apart from the aforementioned non-manufacturing PMI data, Challenger job cuts for December, ADP employment figures for December, and initial jobless claims data (12/24 – 12/30) will also be released. The market consensus for ADP employment statistics is an increase of 125,000, slightly up from the previous figure of 103,000. Most of the market forecast ranges fall between 90,000 and 150,000, and any result outside of this range is likely to prompt a response in the dollar market.
The current strategy remains the same: capitalizing on the dollar’s buyback trend that occurred by the end of the year. There is a plan to enter short positions if the buying pressure subsides in anticipation of tomorrow’s U.S. employment statistics.
