Tokio Marine Asset Management provides commentary on the economic indicators likely to affect the USD/JPY exchange rate this week. The focus will be on developments at the ECB Governing Council and in U.S. CPI, while attention is also turning to the Bank of Japan’s policy management.
This week, attention is focused on the ECB Governing Council and U.S. consumer prices (CPI). The ECB is expected to raise the deposit facility rate by 0.25% at its September meeting, while August HICP has reaccelerated to 3.3% year on year. Amid concerns about supply shocks resulting from renewed tensions in the Middle East, senior ECB officials have issued a series of hawkish warnings, suggesting a policy aimed at containing second-round effects on prices.
In the United States, the Federal Reserve is expected to maintain its cautious stance if a slowdown in core CPI is confirmed, which is likely to affect the future course of interest-rate policy. Ahead of the approaching monetary policy meeting, the Bank of Japan has made repeated public comments and indicated that it will “consider [an interest-rate hike] at every monetary policy meeting.”
At press conferences involving Governor Ueda (植田) of the Bank of Japan and the Minister of Finance, attention will focus on comments regarding future policy management, including the September meeting, and there has also been mention of the possibility of an early rate hike. Tokio Marine Asset Management’s commentary identifies ECB and U.S. economic indicators, together with Bank of Japan policy management, as factors that will influence the future direction of exchange rates.