As the risk-off trend that intensified yesterday continues, concerns over AI investment and French government bonds are growing, and market focus is shifting to the direction of the US dollar, Japanese yen and euro ahead of next week’s monetary policy announcements from Japan and the US.
Today’s focus is on how the risk-off trend that intensified yesterday will develop and on the monetary policy announcements from Japan and the US scheduled for next week. Uncertainty over the dollar’s movements has increased in the market. While USD/JPY at times tested the upper 156 range on the downside, the euro temporarily extended its losses against the dollar. As a result, the direction of long-term US Treasury yields and the relative strength of the currencies have attracted attention.
From next week onward, the direction of major currencies and market risk appetite are expected to be reassessed as the monetary policy announcements from Japan and the US approach. Market participants point out that the dollar’s strength and weakness could alternate depending on long-term yield trends and the results of key economic indicators.
Today’s key data include Japan’s, the UK’s, France’s, Germany’s and the euro area’s flash manufacturing and services PMIs, as well as the US flash manufacturing and services PMIs and the final University of Michigan Consumer Sentiment Index. Developments in US corporate earnings over the weekend, along with trends in AI investment and French government bonds, could also affect market risk appetite.
With the monetary policy announcements from the US and Japan ahead, close attention will be needed on the relative strength of the US dollar, Japanese yen and euro, as well as developments in the major markets. Continued attention will also be required regarding peripheral factors such as concerns over AI investment, government bond yield trends and the situation in Iran.