USD/JPY in the New York market will be driven primarily by developments surrounding the October US manufacturing PMI flash reading and the final reading from the University of Michigan survey. Risk-off moves are also possible, with oil price trends and AI-related investment developments among the factors to watch.
In today's New York FX market, USD/JPY is likely to be driven by developments in the US Treasury and equity markets, with attention focused on risk-off trends as well as the October US manufacturing PMI flash reading and the final consumer sentiment index reading.
The forecast for the October US manufacturing PMI flash reading is 55.5, while the forecast for the services PMI flash reading is 58.0. The price and employment indices will also be closely watched. In the final consumer sentiment index reading from the University of Michigan survey, attention will focus on the revised figures showing one-year inflation expectations at 4.7% and five-year expectations at 3.5%.
Higher crude oil prices resulting from rising tensions in the Middle East could support USD/JPY, while concerns about a reversal of AI investment ahead of the US midterm elections and trends in AI-related stocks could act as risk-off factors.
There has been speculation that data center-related investment exceeded private residential investment in US GDP for the April-June quarter, making signs of overheating in AI investment a focus for the market. Some market participants also believe that a potential AI shock could entail the possibility of rate cuts rather than rate hikes if the risk scenario materializes.