End-of-Month Market Volatility: Awaiting Key Events
This week, with the month-end approaching, the market has been unstable and directionless. Following Powell's remarks last weekend, there has been a continuation of dollar selling, but at the start of the week in Tokyo, USD/JPY fell to 143.45 before showing signs of stabilizing. Additionally, oil prices briefly rose due to Middle East tensions, but this movement was also temporary.
Currently, the market's focus is on whether the U.S. rate cut in September will remain at 25 basis points or expand to 50 basis points. At present, a 25 basis point cut is considered likely due to the U.S. presidential election, but changes in U.S. economic indicators could rapidly alter this situation, so vigilance is necessary.
Today, the U.S. housing price index, S&P Case-Shiller Home Price Index, consumer confidence index, and Richmond Fed Manufacturing Index are scheduled for release. Of particular interest is the consumer confidence index, with market expectations at 100.9, slightly up from the previous 100.3. However, these indicators are not expected to have a significant impact on the dollar.
On Thursday, the U.S. Q2 GDP revision will be announced. Unless there is a major deviation from the preliminary figures, significant market reactions are not anticipated. On the weekend, the U.S. inflation indicator, the PCE Deflator, is expected to be released with a year-on-year increase of +2.6%, slightly up from +2.5% previously. However, based on recent market responses, a large disruption is unlikely, leading to a focus on next week’s U.S. employment report.
Regarding speech events, the addresses by Klaas Knot, President of the Dutch Central Bank, and Joachim Nagel, President of the German Bundesbank, are scheduled. In the UK, Prime Minister Keir Starmer's speech is also planned. These speeches could be significant for confirming the outlook for the ECB’s rate cut in September.
Additionally, the U.S. will have a 2-year bond auction, and Nordstrom’s earnings announcement is among the notable corporate reports, but market attention is particularly focused on Nvidia's earnings tomorrow.
Finally, for USD/JPY, a large option cut around 145.25-50 on the 28th is expected to act as strong resistance. A plan is in place to sell if the price approaches this level.
