With the release of the U.S. Consumer Price Index (CPI) approaching, the impact of foreign-exchange intervention, speculation about further intervention, and the outlook for U.S. monetary policy have emerged as the market’s main focuses. USD/JPY is expected to show movement in the lower ¥159s, with the possibility of intervention and policy decisions likely to be key market drivers going forward.
Ahead of the release of the U.S. Consumer Price Index (CPI), the impact of foreign-exchange intervention, speculation about future intervention, and the market’s response to U.S. monetary policy have been identified as the main focuses. The market is currently said to be sensitive to expectations of U.S. rate hikes, and the dollar could move significantly depending on the CPI data.
The indicators scheduled for release today include month-on-month and year-on-year CPI figures, as well as core CPI and events related to the crude oil and equity markets. The schedule of closely watched U.S. data releases has been laid out. The outlook for the impact of foreign-exchange intervention and the policy regarding any future intervention is also highlighted as a key market consideration.
In terms of market movements, USD/JPY is expected to trade in the lower to middle ¥159s, while EUR/USD is expected to trade sideways generally in the 1.15 range. It has also been noted that market movements could be affected by reactions to other indicators, including U.S. long-term interest rates and the fiscal balance.
The key factors in focus today include the release of the U.S. Consumer Price Index, the impact of foreign-exchange intervention and speculation about further intervention, expectations for U.S. monetary policy, and the direction of the U.S. dollar, yen, and euro. Attention is also warranted on movements in major equity markets and U.S. Treasury yields.