Forex Top Team

Back to all insights

💹 Dollar Selling Pressure Gradually Intensifies

💹 Dollar Selling Pressure Gradually Intensifies

— A volatile day driven by soaring U.S. rate-cut expectations, renewed BoJ hawkish bets, and speculation surrounding the U.K. budget

【1】U.S.: Market Enters “Rate-Cut Front-Running Mode”

A series of cautious comments from Fed officials pushed
December rate-cut expectations to around 85% (CME basis) —
a dramatic shift from last week’s 30% range.

Markets have entered a phase where sentiment reacts more to comments than to economic reality,
making the dollar’s rebounds shallow and capping its upside.

【2】JPY Side: December BoJ Rate-Hike Speculation Re-Emerges

A Reuters report changed the entire tone of the yen market:

“The BoJ may issue a hawkish signal, preparing the market for a rate hike in December.”

Additionally, Japan’s labor unions intensified pressure on the government:

“Yen weakness and rising prices are erasing the benefits of wage hikes.”

However, structural yen selling via carry trades remains powerful.
This keeps the environment tricky:

➡ Even when yen-positive headlines arise, yen spikes struggle to extend.

【3】AUD and NZD Take the Lead: Oceania Currencies Push the Dollar Lower

  • Australia’s CPI came in hotter than expected → AUD buying resurges

  • The RBNZ cut rates but signaled a “pause” → NZD sharply rebounds

This Oceania strength translated into broad USD weakness,
reinforcing the dollar-selling bias across the market.

【4】Geopolitics × Commodities: Gold Strength Supports USD Weakness & JPY Strength

Rising China–Japan tensions triggered another wave of safe-haven gold buying.

  • Risk aversion → gold higher

  • Gold rally → typically USD lower & JPY higher

Overall sentiment tilted toward mild risk-off.

【5】U.K. Budget-Induced GBP Spike — but Gains Don’t Stick

This was the day’s most notable surprise.

■ The U.K.’s OBR sharply upgraded its fiscal outlook:

  • FY 2029–30 budget surplus: £21.7bn
    (vs. previous forecast £9.9bn)

Markets reacted positively:

  • GBP/USD: 1.3151 → 1.3201

  • GBP/JPY: up to 206.45

  • EUR/GBP: sharp drop (EUR sold)

But buying didn’t last.
Ahead of the Autumn Budget (21:30 JST),
GBP reverted to pre-event volatility mode.

■ Key risks for the Budget

  • Where will the ~£20bn shortfall be filled from?

  • Can the government secure market confidence without raising income tax?

  • Large swings possible, up or down.

➡ GBP is the center of today’s volatility.

【6】Tonight’s U.S. Data: Labor Indicators Are the Key Event

  • MBA mortgage applications

  • Durable goods orders (flash)

  • Initial jobless claims ← today’s main focus

  • Chicago PMI

Jobless claims are critical because:

➡ They influence whether rate-cut expectations remain justified,
and can easily move the dollar.

【7】Central Bank Speakers: Cluster of ECB Comments Could Shake Markets

Europe sees a heavy lineup of speakers:

  • Müller (Estonia)

  • Vujčić (Croatia)

  • Lane (ECB Chief Economist)

  • Lagarde (President)

EUR tends to move one-directionally under such conditions →
heightened whipsaw risk.

✔ Summary: Dollar Selling Dominates, but USD/JPY Struggles to Drop

▼ Dollar-negative factors

  • Sharp rise in U.S. rate-cut expectations

  • AUD & NZD strength

  • Gold rally

  • Geopolitical tensions

  • Pre-budget flows in GBP

▼ Yen-positive factors

  • Renewed BoJ hawkish expectations

  • Labor union criticism of yen weakness

  • Safe-haven flows due to geopolitical tensions

▼ Yet USD/JPY remains resilient because:

  • Yen carry trades remain strong

  • The market maintains a “sell-JPY-as-baseline” structure

💡 Conclusion

  • Dollar-selling bias is clearly dominant, but

  • USD/JPY is unlikely to plunge sharply due to persistent yen carry flows

  • GBP is likely to be the main volatility center today

More Insights