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market analysis
The interest rate spread has not collapsed and inflation has not been covered. The warm market of USD/JPY
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange]: The interest rate spread has not collapsed, inflation has not been covered, and the warm market of the US dollar/JPY". Hope it will be helpful to you! The original content is as follows:
On Wednesday (September 24), the US dollar rebounded against the Japanese yen, and traded around 148.50 during the European period. The driving factor www.xmtraders.comes from the temporary strengthening of the US dollar: the US dollar index is close to 97.80 and ends its previous two-day retracement; Federal Reserve Chairman Powell emphasized that caution should be maintained on further interest rate cuts, suppressing the market's imagination of rapid easing. On the Japanese side, the initial value of the manufacturing PMI in September fell to 48.4 (49.7 in August), continuing to be in the contraction range, while the service PMI slightly reached 53.0, with limited marginal improvement. The long and short clues of macro and policy are intertwined at the 148 line, bringing the exchange rate into a delicate stage of "strong but limited".
State: The two ends are "slowly braked", interest rate spreads and growth expectations are in a contest
Powell talked about the dilemma this week: the risk of upward inflation and the employment market becoming softer, and relaxing too quickly will "lose the effort", and relaxing too slowly will drag down growth. Its statement is consistent with the cautious tone of several FOMC members (including heads of St. Louis, Atlanta and Cleveland Feds), and jointly pushes the market's expectations of a rapid rate cut in recent months. This is not inconsistent with the fact that the Fed had cut interest rates by 25bp on September 17: the roadmap is more like a "slow brake" than a "sharp turn." Institutions expect there will still be two interest rate cuts of 25bp each this year, and the medium-term goal is to gradually return to the neutral level around 3% from the upper limit of 4.25%. However, the structure of inflation is still mixed with one-time factors such as tariff adjustments, and the Fed needs to guard against secondary inflation caused by the fast easing pace. In this context, the interest rate spread advantage of the US dollar did not collapse immediately, forming a phased suppression of the yen, and also pushed the US dollar index to rebound to around 97.80.
Falling in Japan, manufacturing PMI48.4 refreshed in SeptemberThe weakest reading since March shows that external demand and manufacturing chains are still under pressure; the service industry PMI53.0 has maintained expansion, but its momentum is not strong. Last week, the Bank of Japan remained silent, and relatively hawkish objections appeared within the board of directors, which meant that the withdrawal of ultra-looseness was still on the way, but the rhythm and timing were more restricted by data and political agenda. If the Liberal Democratic Party’s first election is biased on October 4, the new leadership may postpone the interest rate hike; but the 25bp valuation in October has not www.xmtraders.completely subsided. Differences at the policy level have caused the Bank of Japan's "slow exit" to be misaligned with the Federal Reserve's "slow easing": short-term interest rate spreads are still biased towards the US dollar, but the story of the convergence of the medium-term interest rate spread is also brewing, limiting the unilateral appreciation space of the US dollar.
In terms of data forward-looking, U.S. durable goods orders, PCE inflation (Thursday and Friday) and new home sales (Tonight) will calibrate the relative strength of "inflation stickiness and slowdown in growth"; in Japan, Tokyo CPI (Friday) is an important "foresight anchor" to observe the Bank of Japan's next steps. If the US inflation stickiness rises and growth does not cool down significantly, interest rate spreads and risk aversion preferences will jointly support the US dollar; on the contrary, once core inflation falls significantly, and repricing with the Bank of Japan's interest rate hike risk, the US dollar against the Japanese yen will be subject to the above resistance and turn to a deeper retracement rhythm.
Technical aspect:
From the daily chart, the middle rail of the Bollinger band is 147.546, the upper rail is 148.583, and the lower rail is 146.508. The latest price of 148.421 is approaching the upper track, indicating that short-term kinetic energy is dominant, but the upper space is beginning to be bound by bandwidth. The early swing high point 149.134 and the earlier 150.914 form a static resistance ladder, while the proximal low point 146.211/145.480 forms layered support with the earlier 145.851.
In terms of MACD, DIFF0.101 passes DEA0.027, and the bar chart turns positive and is slightly amplified, which means that the kinetic energy has just entered the positive zone but is still a "light bull"; the price needs to be effectively stabilized on the Bollinger upper rail and cooperate with the histogram to further expand, so that the upward gate of 149.134-150.914 is expected to open. RSI (14) is 56.919, which is still far from the overbought zone, which means that the upward trend is not overdraft, but it also indicates that the market is more likely to evolve into "slow climbing + frequent backtesting" rather than "straight-line breakthrough".
www.xmtraders.comprehensive interpretation: 147.546 (Bolling middle track) is the current trend watershed. The slope of the upward channel is maintained above, and once the daily line closes and falls back to the zero axis again with MACD, the structure will degenerate into the "mean regression" path of interval oscillation or even descending down the lower track 146.508. The key short-term observation points fall between 148.583 and 149.134: If the bandwidth expands and the price closes above the upper track, it is the leading form of "volume breakthrough"; if the shadow line is repeatedly up, beware of the www.xmtraders.common scripts of "false breakthrough + falling back to test the middle track".
Preview of market sentiment:
Since this week, the weak consensus conflict between the "slow easing" of the US dollar fundamentals and the "strong US dollar trading", has caused foreign exchange volatility to beIt has not expanded significantly, but it is more like the "Bolling Band squeeze" before the risk event: the price is close to the upper track, but the sentiment is not extreme yet. The 150 integer mark above may still gather more protective bullishness, while the 147.50 line below may have a defense of the premium seller.
The core driving force of sentiment is:
1) The order of PCE and Tokyo CPI is implemented - if both are "not weak in inflation", then sentiment is tilted towards "filling for long whenever you return";
2) The sway of the Bank of Japan's interest rate hike bets - the political agenda may make the probability of "adding 25bp in October" sometimes strong and weak in the news flow, which will directly affect the safe-haven premium of the yen;
3) The misalignment of global interest rate spreads and risk appetite - European interest rate spread volatility and policy uncertainty provide secondary safe-haven support for the US dollar in the near term, but it is not enough to change the narrative of "the Fed's slow rate cut."
Overall, the market is rational and optimistic about "being cautiously long the US dollar and not chasing when it is high", and its belief in unilateral pulling up the exchange rate has not yet been unified.
The above content is all about "[XM Foreign Exchange]: The interest rate spread has not collapsed, inflation has not been covered, the warm market of the US dollar/JPY" is carefully www.xmtraders.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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