China Cuts Rates, Dollar Under Pressure Amid Risk Appetite, Yen Weakness Continues

China Cuts Rates, Dollar Under Pressure Amid Risk Appetite, Yen Weakness Continues

Today, the People's Bank of China lowered the one-year interest rate from 2.30% to 2.00%. This move is part of previously reported economic stimulus measures and is accelerating a global risk appetite. Chinese and Hong Kong stocks have surged, European stocks are also rising, and the NY Dow has once again reached new highs. The commodities market remains strong, supported by global growth expectations. However, there is also an element of anticipation, and the focus will be on whether China's stimulus measures will actually take effect.

Increasing Dollar Selling Pressure, Yen Weakness Progresses

In the forex market, the dollar index is once again testing lower levels. EUR/USD has risen to the 1.12 range, and GBP/USD has moved up to the 1.34 range, indicating a broad dollar weakening. Meanwhile, USD/JPY is caught between yen selling due to risk appetite and dollar selling, with yen selling currently dominant but capped around 145 yen. This dollar weakness is influenced not only by the risk appetite mood but also by the beginning of interest rate cuts by U.S. monetary authorities.

Currency Trends and Strength Relations

The dollar is showing a significant decline, and when looking at currency strength over the past month, the pound, Australian dollar, and New Zealand dollar stand out as particularly strong, followed by the yen, euro, Canadian dollar, and Swiss franc. Notably, risk-sensitive currencies and resource currencies like the pound and Oceania currencies are performing well, while the Canadian dollar and Swiss franc are comparatively weaker.

Over the past week, the yen has been weaker than the dollar, with strong currency groups including the NZ dollar, Australian dollar, pound, and Canadian dollar. The euro and Swiss franc appear slightly less favorable, but the risk appetite mood seems to further promote yen weakness.

Upcoming Events to Watch

In the overseas market later, economic indicators such as U.S. new home sales (August) and Brazil's expanded consumer price index (IPCA) (September) will be released. Additionally, UK Monetary Policy Committee member Green will give a speech on consumption, which may reveal the background behind his recent stance to maintain interest rates. Towards the end of the NY session, Fed Governor Couglan is scheduled to speak on economic outlook. Other events include the OECD interim economic outlook, U.S. weekly oil inventory statistics, and a U.S. 5-year bond auction ($70 billion).

Future Strategy

The September consumer confidence index in France rose to 95.0, which has strengthened demand for the euro. Today, I plan to continue targeting euro buying.