Concerns Over Upside Potential for the Pound, Whose Rise Shows No Signs of Stopping
04.10.2022
- Eurozone Producer Price Index
- Logan, U.S.: Remarks by the President of the Dallas Federal Reserve Bank
In U.S. currency trading the previous day, the U.S. dollar fell after the September ISM Manufacturing Index, released during U.S. trading hours, declined to 50.9 from the previous reading of 52.8. The USD/JPY pair touched 145.306 before reversing course and falling to 144.153.The decline halted as the pair found support at the 200-period SMA on the hourly chart. Although the pair is attempting to rise during today’s Asian session, the RSI continues to show divergence on the daily chart, so we will be watching closely to see if the rally remains limited.
European currencies saw the pound rise yesterday after the Truss administration withdrew a proposal to lower the top income tax rate, one of its major tax cut measures. The pound/yen pair rose from 160.560 to 163.869.During today’s Asian trading session, the pair has hit a new high, rising to 164.099. Although GBP/JPY has already gained more than 3.6 yen this week alone, the daily RSI has not reached 70 and shows no signs of overheating, so it will be interesting to see if the upward trend continues.
Today’s schedule includes the release of the Eurozone Producer Price Index at 18:00 European time; remarks by Logan, President of the Dallas Fed, and Williams, President of the New York Fed, at 22:00 U.S. time; and remarks by Mester, President of the Cleveland Fed, at 22:15 U.S. time;Cleveland Fed President, at 23:00 U.S. manufacturing orders and the U.S. JOLTS survey, at 24:00 remarks by ECB President Lagarde, and at 26:00 remarks by U.S. San Francisco Fed President Daly.We should remain cautious about the upside potential of the pound, which shows no signs of stopping its rise.
Author: Keisuke Sakurai
