European and American market opening comments
“Does the dollar/yen continue to decline, and the dollar-buying trend continues despite speculation about Japan’s foreign exchange intervention?”
In the European and American foreign exchange markets on the 29th, the dollar and yen are expected to decline. Expectations of the Japanese government’s foreign exchange intervention will lead to an increase in yen buying, which is expected to put downward pressure on the dollar. However, the dollar will continue to be bought in anticipation of tightening US monetary policy, and it will be difficult for the dollar to fall against the yen.
The US core PCE price index released last weekend remained high, and the euro-dollar exchange rate fell to the $1.0670 level due to the dollar’s appreciation in anticipation of the prolongation of the current tight monetary policy. On the other hand, the Bank of Japan once again showed a cautious stance toward financial normalization at its monetary policy meeting, increasing its yen-selling trend and aiming for 158 yen. Even though the Asian market was closed in Tokyo at the beginning of the week, the price briefly rose to the 160 yen level in the morning. After that, the yen’s rapid appreciation caused the dollar to drop by about 5 yen to the low 155 yen range. In the overseas markets after this, the price movements of the yen will be closely watched. The yen has been on a sharp depreciation since the 26th due to the Bank of Japan’s accommodative policy stance. However, the dollar-yen pair has surpassed the psychological milestone of 160 yen, and the rapid rate of appreciation may have prompted the Japanese government to intervene in the exchange rate. If this view spreads in the European and American markets, yen selling will likely shrink significantly. However, with the re-acceleration of inflation in the US, the timing of the Federal Reserve’s interest rate cuts will be pushed back, and the dollar is likely to remain weak against the yen.
Currency analysis
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