In the foreign exchange market on October 2nd, the upward momentum of the dollar/yen pair has slowed, and there is a possibility that it may not surpass the 150 yen mark at the beginning of the month. There are several reasons behind this prediction.
Firstly, it’s well known that the interest rate differential between Japan and the United States is supporting the rise of the dollar against the yen, and it remains a crucial factor in the foreign exchange market.
However, the slowdown in the US Core PCE Price Index is expected to be a factor restraining the upside potential of the dollar.
Furthermore, the Japanese government’s stance against yen depreciation is also constraining the dollar’s rise.
Concrete examples include the higher-than-expected initial jobless claims in the United States and the strong final GDP figures.
Nevertheless, it’s important to note that the euro-dollar pair has risen to around 1.0580 dollars, and the dollar/yen pair has softened to the 149.10 yen range as long-term interest rates have reached high levels and crude oil prices have eased.
In the future, the foreign exchange market will continue to focus on the direction of US interest rates, the slowdown in the Core PCE Price Index, and the waning expectations of monetary tightening, which will likely weaken the trend of high interest rates and a strong dollar.
■ Impact of US Interest Rates and Policies on the Forex Market
Next, let’s focus on the impact of US interest rates and policies on the forex market.
In conclusion, US interest rates and policies have a significant impact on the forex market, primarily because long-term US interest rates have reached their highest levels since 2007, which is supporting the US dollar.
Additionally, the policies of the Federal Reserve (FRB) in the United States are drawing attention, with comments from William Williams, President of the Federal Reserve Bank of New York, being closely monitored in the market.
For instance, Williams mentioned that the policy rate is close to its peak level and provided forecasts for inflation and GDP growth rates. While this comment had a limited market reaction, it suggests the potential influence of future FRB policies on the forex market.
Therefore, the forex market will continue to watch the direction of US interest rates and FRB policies, which could impact the movements of the dollar/yen pair.
■ Euro-Dollar and the Underlying Risk Factors
Let’s now shift our focus to the euro-dollar pair and the underlying risk factors.
In conclusion, the euro-dollar pair is relatively stable, with the euro showing resilience in the mid-1.05 dollar range and some easing of the yen’s safe-haven demand.
Furthermore, the lackluster performance of the US stock market has been supportive of the euro, highlighting the relative strength of the euro amid risk factors.
The dip into negative territory in the US stock market has provided support for the euro-dollar pair, and the ongoing risk factors could continue to influence its movements.
■ Key Economic Indicators and Events
Lastly, let’s emphasize the importance of key economic indicators and events.
In the European and US markets, several crucial economic indicators and events are being closely monitored, which could have a significant impact on the forex market.
Attention should be given to indicators such as the UK’s mortgage approvals and the Eurozone’s flash consumer price index.
Furthermore, events including US personal income, personal spending, Core PCE Price Index, wholesale inventories, Chicago Purchasing Managers’ Index, and the University of Michigan Consumer Sentiment Index (final) are also under scrutiny.
These economic indicators and events serve as significant market-moving factors, especially data related to inflation and economic sentiment, making them vital sources of information for traders.
As we enter the market in the coming week, let’s keep a close watch on these economic indicators and events.
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