Prospects for the exchange rate between the US dollar and the Euro
2023-09-19
Last week, the US dollar rebounded against the Japanese yen. The ISM Non-Manufacturing Prosperity Index in August reached a six-month high, with a decrease in the number of new applications for unemployment benefits compared to last week, and an increase in labor costs (confirmed data) from April to June. These are all background factors supporting the appreciation of the US dollar in US economic indicators. Despite the wording taken by the finance officer of Kanda to curb sharp market fluctuations and the intensification of stock market decline leading to an increase in yen buying, the USD/JPY exchange rate has risen from around 146 yen to the latter half of 147 yen.
Bank of Japan President Yoshida stated that lifting negative interest rates is also an option during a period of confidence in inflation, and this statement is an indication of the possibility of complete data by the end of the year. Therefore, the USD/JPY exchange rate fell to the second half of 146 yen in the new Asian trading session. On the other hand, the meetings of the Federal Reserve Open Market Committee (FOMC) will be held on the 19th and 20th, and the speeches of policymakers will enter a calm period. Although the rising rate of the US Consumer Price Index (CPI) in August is expected to accelerate to 3.6% in the same period last year, the core index excluding food and energy is expected to slow to 4.3%. At the meeting, the possibility of maintaining policy interest rates was high, and there were still concerns in the market about Japanese government intervention in the market and the slowdown in the European and Chinese economies. Although the USD/JPY exchange rate has slightly declined from last week's high of 147.87 yen, the weekly candlestick chart shows a "bullish trend", indicating that USD buying will continue.
The euro fluctuated against the US dollar last week. Prior to the meeting of the European Central Bank (ECB) Council on the 14th, many senior officials delivered speeches, but there was no clear consensus on whether to proceed with additional interest rate hikes. In the Eurozone, both August's Comprehensive Purchasing Managers' Index (PMI) and April June's actual GDP data have experienced a downward revision, raising concerns about internal economic slowdown, which has increased upward pressure on the euro against the US dollar. The exchange rate has fallen from the first half of $1.08 to the second half of $1.06, falling for eight consecutive weeks. The euro/yen exchange rate fluctuated around the left half of 158 yen and 157 yen, ultimately ending in the first half of 158 yen.
In terms of economic indicators, the German ZEW economic expectations index is expected to decline to -15.0 in the data released on September 12th. However, there are differences in market views regarding whether a 0.25% interest rate hike will be implemented by the ECB Council. People will also pay attention to ECB staff's revisions to the economic outlook, as well as President Lagarde's press conference. However, despite the continuous increase in minimum wages in various countries of the eurozone, it is expected that labor costs and wage growth rates in the eurozone will remain high after July. Therefore, near the low point of $1.0633 on May 31, people expect the euro to rebound against the US dollar. Regarding the yen, people are concerned about whether the depreciation trend of the yen will slow down, and whether upward pressure still exists near the high point of 159.76 yen on August 30th.
Bank of Japan President Yoshida stated that lifting negative interest rates is also an option during a period of confidence in inflation, and this statement is an indication of the possibility of complete data by the end of the year. Therefore, the USD/JPY exchange rate fell to the second half of 146 yen in the new Asian trading session. On the other hand, the meetings of the Federal Reserve Open Market Committee (FOMC) will be held on the 19th and 20th, and the speeches of policymakers will enter a calm period. Although the rising rate of the US Consumer Price Index (CPI) in August is expected to accelerate to 3.6% in the same period last year, the core index excluding food and energy is expected to slow to 4.3%. At the meeting, the possibility of maintaining policy interest rates was high, and there were still concerns in the market about Japanese government intervention in the market and the slowdown in the European and Chinese economies. Although the USD/JPY exchange rate has slightly declined from last week's high of 147.87 yen, the weekly candlestick chart shows a "bullish trend", indicating that USD buying will continue.
The euro fluctuated against the US dollar last week. Prior to the meeting of the European Central Bank (ECB) Council on the 14th, many senior officials delivered speeches, but there was no clear consensus on whether to proceed with additional interest rate hikes. In the Eurozone, both August's Comprehensive Purchasing Managers' Index (PMI) and April June's actual GDP data have experienced a downward revision, raising concerns about internal economic slowdown, which has increased upward pressure on the euro against the US dollar. The exchange rate has fallen from the first half of $1.08 to the second half of $1.06, falling for eight consecutive weeks. The euro/yen exchange rate fluctuated around the left half of 158 yen and 157 yen, ultimately ending in the first half of 158 yen.
In terms of economic indicators, the German ZEW economic expectations index is expected to decline to -15.0 in the data released on September 12th. However, there are differences in market views regarding whether a 0.25% interest rate hike will be implemented by the ECB Council. People will also pay attention to ECB staff's revisions to the economic outlook, as well as President Lagarde's press conference. However, despite the continuous increase in minimum wages in various countries of the eurozone, it is expected that labor costs and wage growth rates in the eurozone will remain high after July. Therefore, near the low point of $1.0633 on May 31, people expect the euro to rebound against the US dollar. Regarding the yen, people are concerned about whether the depreciation trend of the yen will slow down, and whether upward pressure still exists near the high point of 159.76 yen on August 30th.