All eyes are on whether the euro’s weakness following the ECB announcement will continue
28.07.2023
- Press Conference by Bank of Japan Governor Ueda
- U.S. PCE Deflator
In the U.S. currency market yesterday, the U.S. dollar rose against the yen immediately after the release of the second-quarter U.S. GDP figures, which showed a significant expansion from the previous reading of 2.0% to 2.4%.The USD/JPY pair surged from 139.373 to 141.320, breaking above the 20-period moving average on the 4-hour chart. However, in response to a Nikkei newspaper article leaked early this morning regarding a proposed revision to the YCC policy, the pair plummeted to 138.763. The market experienced significant volatility.
Following yesterday’s announcement of the ECB’s policy rate decision, the central bank raised rates by 0.25% as expected by the market, triggering a “sell-the-fact” reaction that caused the euro to fall against both the yen and the U.S. dollar. The euro/yen pair fell from 156.187 to 152.194.The decline has continued during today’s Asian trading session, with the pair falling further to 151.411. We will closely monitor the direction of the euro to see if this decline continues into the U.S. trading session.
Today’s schedule includes France’s second-quarter GDP at 14:30, a press conference by Bank of Japan Governor Ueda at 15:30, France’s Consumer Price Index and Producer Price Index at 15:45, Switzerland’s KOF Leading Index and Turkey’s trade balance at 16:00,at 9:00 PM, Germany’s Consumer Price Index and South Africa’s fiscal balance; at 9:30 PM, Canada’s GDP, U.S. personal income, U.S. PCE deflator, and U.S. second-quarter Employment Cost Index; and at 11:00 PM, the U.S. University of Michigan Consumer Sentiment Index.We will need to carefully assess currency strength and weakness to determine whether the euro’s weakness following the ECB announcement will persist.
Author: Keisuke Sakurai
