Dollar-yen temporarily fell to low 150 yen level, pressure on yen appreciation = NY exchange overview
In today’s New York exchange market, dollar selling was dominant in the first half, and the dollar/yen pair at one point fell to the low 150 yen level. The number of new U.S. unemployment insurance claims announced that day was higher than expected, indicating a softening of the U.S. labor market, leading to lower U.S. bond yields and stronger selling in the dollar. The crude oil market also plummeted to the lower 72 dollar range at one point, and the dollar-yen pair was seen falling below the 21-day line, which was around 150.45 yen today.
Although the dollar had been bought back in the second half, it appears that the strong yen was putting even more pressure on the dollar-yen. In fact, the decline in cross-yen currencies such as the euro yen and pound yen was severe. The US stock market, which had continued to perform well today, seems to have paused its rally, making it easier to buy the yen. The CEO of Wal-Mart, the world’s largest retailer, who announced its financial results today, warned that “deflation in the United States may become evident in the coming months,” which also dampened market risk sentiment.
However, while the weakening US economy is favorable for long yen investors, recent comments from the Bank of Japan have reminded investors that easing policy will continue until the inflation outlook becomes more stable, limiting the yen’s appreciation. It was also pointed out that there was a possibility that
The euro dollar at one point rose to around $1.0895, and there were also signs of testing the $1.09 level. However, due to the rapid rise over the past few days, it seems that sell orders were lined up just around $1.09.
According to technical charts, this rebound in the EUR/USD suggests the possibility of a break above the high of 1.0945 reached at the end of August. The euro dollar is ahead of a significant recovery from Tuesday, but the weekly MACD (moving average convergence divergence indicator) has shown a golden cross, suggesting there is room for further rebound. That’s what it means.
On the other hand, he added that the recent rally is probably more than a self-sustaining rebound, and that it is unlikely that the price will break above the upper resistance at $1.1065.
The pound-dollar exchange rate has paused from the previous day’s decline. At one point, the price rose to the mid-$1.24 level, and there were even instances where the price broke above the 200-day line, which is around $1.2440. However, that level is acting as resistance to the upside.
Following the previous day’s British Consumer Price Index (CPI), expectations for an interest rate cut from the Bank of England next year are increasing, weighing on the pound. Going forward, the impact of the Bank of England’s interest rate hike will be reflected in borrowing costs, the unemployment rate will rise in the labor market, and the job openings-to-applicants ratio will fall, leading to UK inflation falling to within the 2-3% range by mid-2024. Some people have different views.
On the other hand, wage increases may pose an upside risk to this forecast, but wage increases are not leading inflation, but rather lagging it. Therefore, if inflation slows further and the real wage increase rate turns positive, wage increases should become more gradual, albeit with a delay.
MINKABU PRESS Editorial Department Takumi Nozawa
Author: MINKABU PRESS
This is an editorial department that writes articles on market information and financial products such as stocks and FX, mainly for the asset formation information media “Minkabu” and the investor information media “Kabutan.” We provide a wide range of news and columns useful for investing, as well as content for beginners.