Daily Analysis


Today’s Outlook

The dollar-yen pair plunged to 142.24 at one point due to the impact of the “US bond downgrade shock”, but the strong results of the US ADP employment statistics led to a full return to 143.48. The daily candlestick is moving above the major technical points (Ichimoku Kinko Hyo conversion line, reference line, cloud upper limit, 21-day moving average line, Bollinger mid band), and a strong buy signal is indicated by a “bullish From a technical point of view, considering the fact that the “perfect order” and the “upward trend of the Dow theory” have been established, and the “Ichimoku Kinko Hyo Sanyaku turnaround”, which suggests a strong buy signal on the 4-hour chart, has been established. Therefore, it can be judged that the sentiment is extremely strong.

In terms of fundamentals,

(1) the U.S. Fed’s expectations of a prolonged monetary tightening (the U.S. ADP employment statistics released yesterday strongly exceeded market expectations → speculation of an additional interest rate hike within the year reignites → sharp rise in U.S. long-term interest rates →Resumed buying of the dollar against major currencies) and

(2) Expectations of prolonged monetary easing by the Bank of Japan (the Bank of Japan is taking a stance of suppressing the sharp rise in yen interest rates through daily limit-price operations →Yesterday, BOJ Vice Governor Uchida said, “We will tenaciously We are still in a phase where easing should continue” and “YCC’s flexible operation is not an exit strategy from monetary easing policy” → resumption of yen selling against major currencies),

( 3) There are factors suggesting a rise in the dollar-yen exchange rate, such as the widening interest rate differential between Japan and the US against the background of 1 and 2 above, and the accompanying expectations that the yen carry trade will become active.

If the number of new U.S. jobless claim applications scheduled for today (7:30 p.m.) and the U.S. July ISM Nonmanufacturing Composite Index (21:00 p.m.) show good results, the dollar-yen pair will rise to its most recent record on June 30. Since a scenario of a sharp rise toward a high of 145.07 is also assumed, we continue to forecast the continuation of the strong dollar and weak yen trend as the main scenario. In addition, today’s speech by Richmond Federal Reserve Bank President Birkin (19:30) is likely to attract attention.

Today’s expected range: 142.75-144.25