Dollar Trend: Continuation of Dollar Strength with Signs of Stagnation and Temporary Risk Aversion
Dollar Market Overview: Strong but Stagnant Momentum
The dollar continues its strong trend, but its momentum has slowed down this week, resulting in a somewhat stagnant market. Although there has been no significant change in the key theme of “Trump Trade,” the ongoing tensions between Ukraine and Russia have gained attention as new factors. Reports of Russia launching long-range missiles (ICBM) have led to increased risk aversion. However, this risk aversion is seen as temporary, and the lack of sustained momentum continues.
Bank of Japan’s Outlook: December Rate Hike Expectations Affecting Yen
Market expectations for a potential interest rate hike by the Bank of Japan (BoJ) in December are strengthening. Although Governor Ueda has not made a clear statement, his comment that “many data points will be released before the December meeting” has fueled speculation about the possibility of a rate hike. As a result, the yen is reacting sensitively to these developments, and higher volatility is expected in the yen market leading up to the BoJ’s next meeting on December 19.
Today’s Key Economic Data
Among the data expected to be released today, the following are particularly noteworthy:
- U.S. Initial Jobless Claims (11/10 – 11/16)
Market Forecast: 220,000 claims (Previous: 217,000)
A slight increase is expected, but attention will be on whether this data confirms the strength of the labor market.
Other Important Indicators:
- U.K. Public Sector Net Borrowing (October)
- Hong Kong Consumer Price Index (CPI) (October)
- Turkey Central Bank Policy Rate (November)
- U.S. Philadelphia Fed Manufacturing Index (November)
- U.S. Leading Economic Index (October)
- U.S. Existing Home Sales (October)
- South Africa Central Bank Policy Rate (November)
Risk Event:
The release of the U.S. Initial Jobless Claims is likely to have a short-term impact on the dollar market’s direction.
Speech Events and Market Focus:
Several key speeches from European officials are scheduled for today:
- European:
- Knot (Dutch Central Bank President)
- Holzmann (Austrian Central Bank President)
- Lagarde (ECB President)
- U.S.:
- Barr (Vice Chairman of the Federal Reserve)
- Goolsbee (Chicago Fed President)
- Harker (Cleveland Fed President)
In the U.S., the earnings report from major retailer “Gap” is also scheduled, which could impact the retail sector.
Risk Aversion Focus: Gold
The news of Russia’s ICBM launch, while not carrying a nuclear payload, is seen as a demonstration of nuclear capability, which has intensified risk-off sentiment. As a result, gold continues to attract inflows as a safe haven. Gold is expected to remain a key asset to watch during risk-off scenarios.
Today’s Strategy:
- Maintain the Dollar Buy Trend: As long as Initial Jobless Claims do not exceed market expectations, the strong dollar trend is expected to continue.
- Look for Opportunities to Buy Gold: Given the geopolitical risks affecting market sentiment, gold remains a key focus.
- Be Cautious of Yen Volatility: With heightened expectations for a BoJ rate hike, be prepared to respond to sudden yen movements.
We will carefully monitor short-term market fluctuations while staying flexible in our approach.
