■ Geopolitical Risk in the Middle East and USD/JPY
On October 9th, the foreign exchange market witnessed increased attention on geopolitical risks in the Middle East.
The intensifying conflict between Israel and Hamas has created geopolitical instability, which is affecting the market.
The Middle East is a key hub for oil supply, and heightened geopolitical risk tends to drive up oil prices.
The rise in oil prices can boost demand for the US dollar as it is the primary currency for oil trading, potentially leading to an increase in the USD/JPY exchange rate.
The recent high of 150.16 yen on October 3rd is being closely watched as a potential upper target.
Conversely, with rising geopolitical risks, there is a possibility of increased demand for the US dollar as a safe-haven currency, warranting caution regarding potential USD selling and JPY buying interventions.
The lower target for USD/JPY is the October 3rd low of 147.43 yen.
The foreign exchange market is constantly influenced by various factors, and currency pair movements can be unpredictable.
In this analysis, we will delve deeper into the impact of Middle East geopolitical risks, domestic factors in the United States, and budgetary issues on the forex market.
■ Domestic Factors in the United States and the Forex Market
Domestic events in the United States also have the potential to influence the forex market, particularly economic policies and political uncertainties.
・Impact of US Economic Policies
Announcements related to US monetary policies, including interest rate hikes, can have a significant impact on the forex market.
Market participants are closely monitoring the Federal Open Market Committee (FOMC) meetings for any hints of interest rate increases.
Changes in monetary policy guidance can lead to substantial fluctuations in the forex market.
・Political Uncertainty
Political issues and disputes within the United States can also affect the USD exchange rate.
Specifically, the ongoing struggle to appoint a successor to Kevin McCarthy as the Speaker of the House of Representatives has created political uncertainty.
The difficulty in selecting the next Speaker of the House, especially without the support of Republican hardliners, suggests a degree of political instability.
■ Budgetary Issues and Caution Regarding Bond Ratings
After November 17th, if the US budget proposal fails to pass, the possibility of a government shutdown becomes more likely.
Government shutdowns have occurred in the past and have heightened concerns about credit risks associated with government bonds.
The closure of government agencies increases uncertainty in investments related to government bonds, potentially affecting bond prices.
■ Conclusion
Considering these factors, the outlook for the forex market remains uncertain, and market participants need to exercise caution.
Many factors influence the market, often interconnected, making it challenging to predict market movements.
Investors must remain vigilant for the latest information and conduct thorough risk management.
The forex market is highly volatile, and investors must stay responsive to evolving market conditions.
Monitoring these factors closely and implementing strategic trading approaches will be key to achieving success.
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