Directional clarity remains elusive in the forex market post-US CPI release, with fluctuations leading to indecision. While there was initially a dollar buying reaction, subsequent intense swings saw a return to dollar weakness. Short-term financial markets have already priced in a potential US rate cut starting in June, and this sentiment has remained unchanged even before the CPI release. The US stock market, however, remained robust.
Today marks the concentrated response day for major corporations in the spring wage negotiations. Many companies have announced wage increases that either meet or exceed expectations, which is seen as positive amid ongoing movements toward potential negative interest rate policy (NIRP) removal and yield curve control (YCC) adjustment at the Bank of Japan’s meeting on the 19th.
Later today, BOJ Governor Ueda will attend a meeting of the House of Councillors Budget Committee. It remains to be seen whether there will be any indications regarding exit strategies or if the cautious stance, such as ongoing analysis, will continue. However, the recent yen appreciation in response to reports of full wage increases appears to be subsiding for now, with attention turning to the results of the first round of spring wage negotiations on the 15th.
While I anticipated more directional clarity post-US CPI, the current situation remains uncertain. I’m hopeful for some movement with tomorrow’s US retail sales and PPI releases.
I plan to maintain a buying stance on the Japanese yen until the 19th.
