On 18 August, the market is focused on the impact of foreign-exchange intervention and expectations of further action, the outlook for U.S. monetary policy, and developments in Japanese policy. Ahead of the release of the July FOMC minutes, market attention is also focused on USD/JPY developments, the impact of the interest-rate differential, and comments from the Bank of Japan and Japanese and U.S. authorities.
The focus today is on the impact of foreign-exchange intervention and expectations of further action, with the potential effects on U.S. long-term interest rates and movements in the U.S. dollar also being highlighted. Against the backdrop of the Japan-U.S. interest-rate differential, the direction of USD/JPY is attracting attention, while the market is also monitoring its reaction to whether intervention takes place and its potential scale.
In the U.S. market, the risk of volatility in the dollar is expected to rise around the release of major U.S. economic data and events, with the sequence of data releases from the 23rd onward cited as a potential catalyst for USD/JPY. Housing-related data and inflation indicators in particular are expected to be important.
In Japan, expectations regarding the Bank of Japan's monetary policy and the timing and number of rate hikes are strengthening, which, together with the possibility of intervention, could affect volatility in the Japanese market. Market participants are also watching developments at the Bank of Japan and comments from the government.