– Nikkei Stock Average moves to 31,000 yen level with strong US stocks and weaker yen –
In the Tokyo stock market on the 29th, the risk-on market continued, and the Nikkei Stock Average recovered significantly to the 31,000 yen level. The US and European stock markets rose almost across the board over the weekend, boosting the market’s bullish sentiment as the US debt ceiling issue moved toward resolution. Will it go higher from here, and what will happen to the exchange rate movement that holds the key to the stock market? We asked two market insiders who are active on the front lines of the industry about their future prospects.
● “The euro is on an upward trend with the June FOMC in mind.”
Mr. Masakazu Sato (Foreign Exchange Online Senior Analyst)
Regarding the US debt ceiling issue, a basic agreement was reached to raise the statutory ceiling until 2025. Compromises are conspicuous in the contents, and it seems that priority was given to avoiding default. Whether the US bond market will be sold or bought in response to this agreement, we are paying attention to the reaction of the US market on the 30th after the Memorial Day break.
Longer term, the market’s focus is on whether the Federal Open Market Committee (FOMC) will raise interest rates by 0.25% in June. The US gross domestic product (GDP) revision for the January-March quarter was revised upward from the preliminary figures, and the number of new unemployment insurance applications in the US did not increase as expected. there is
Personally, I expect the policy interest rate to remain unchanged at the June FOMC meeting. However, the results of the US employment report on the 2nd of this weekend and the US consumer price index (CPI) on the 13th will also have a large impact. Even if there is a rate hike in June, there will be at most one more hike in the rest of the year. The interest rate hike phase is nearing its end, and we are not in a situation where interest rate hikes will be carried out at a rapid pace like last year. The BOJ monetary policy meeting in June is also expected to maintain the current monetary policy, but if domestic prices continue to rise toward the second half of the year, the BOJ will likely be forced to review its monetary policy. .
Under these circumstances, the range of the dollar-yen exchange rate for about one month is expected to be around 135.00 yen to 142.00 yen per dollar. The dollar is expected to see rough trading before and after the FOMC. The euro is expected to range between 1.06 and 1.11 dollars against the dollar and between 147 and 153 yen against the yen. With interest rate hikes expected by the European Central Bank (ECB) Governing Council, we expect the euro to appreciate.
(Interviewer: Hideyuki Okazato)
After working at a Japanese bank, joined Banque de Paribas (currently BNP Paribas). He has held positions such as Interbank Chief Dealer, Treasury Director and Senior Manager. He has been involved in the forex world for over 20 years.
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