There have been periods in which upward pressure on the dollar has shown signs of easing, but close attention remains necessary given recent market moves. The market is expected to remain in a wait-and-see mode for the next catalyst. Against a backdrop of concern over government intervention and developments in interest-rate differentials, markets are heading into a series of key data releases.
The dollar has been observed strengthening in foreign exchange markets, with the dollar index rising from mid-September and at one point renewing its year-to-date high. However, recent daily charts show an upper shadow, leading some to believe that the dollar's momentum has paused.
USD/JPY has continued to trade around ¥158, with concern over efforts to curb yen depreciation and currency intervention tending to intensify around the ¥158–159 range. EUR/USD moved into the 1.11 range this week as the dollar strengthened and the euro weakened. French fiscal and political uncertainty was also said to have had an impact, while trading has continued to be choppy in the low 1.12s.
The minutes of the US FOMC and the ECB are among the key items in focus this week, but they are not expected to contain material showing specific numerical projections, and few surprises are anticipated. The week after the employment report tends to offer few market catalysts, and the market is expected to remain in a phase of waiting for the next one.
Economic indicators scheduled for release in overseas markets include Swiss employment data, France's industrial production index, eurozone retail sales, the UK's construction PMI, the US trade balance and Canadian indicators. Some market participants believe that an expansion of the US trade deficit from the previous reading is already priced in.
Among scheduled remarks, BOJ Governor Ueda is due to deliver a speech during London hours, with its impact on USD/JPY in focus. Several other central bank governors are also scheduled to speak through New York hours. In the US Treasury market, a 3-year Treasury auction is also expected to be held.