The USD/JPY exchange rate surpassing the 155 yen mark indicates a significant yen depreciation level, with today's focus

Yesterday in the London market, the USD/JPY exchange rate easily climbed into the 155 yen range. Amid a lack of significant economic data, the rise in US bond yields had been the main driver of dollar buying pressure. Behind this, there seems to be persistent speculation about the delay in the start of interest rate cuts by US monetary authorities this year. While the market had viewed 155 yen as the point for potential intervention, similar to 152 yen previously, it appears to have been disappointed once again. With the dollar-yen rise based on the differences in economic conditions between the US and Japan, there is a growing skeptical view that the effect of currency intervention is merely temporary.

Against this backdrop, the Bank of Japan's monetary policy meeting is being held from today. There is growing speculation in the market about upward revisions to inflation forecasts in the outlook report. The policy interest rate itself is expected to be left unchanged, following the removal of negative interest rates at the previous meeting. However, the situation of yen depreciation has progressed further since the previous meeting, so statements on this matter and comments from Governor Kuroda are likely to be closely watched.

In the overseas markets thereafter, attention is focused on the US real GDP preliminary estimate for the first quarter. This is truly a representative indicator of US fundamentals. GDP growth is expected to be 2.5%, slowing from the previous 3.4%. Personal consumption is forecasted to slow to 3.0% from the previous 3.3%. On the other hand, the deflator is expected to increase significantly to 3.0% from the previous 1.6%. Core deflator is also expected to rise sharply to 3.4% from the previous 2.0%. GDP is expected to grow positively for the seventh consecutive month, indicating overall strength in the US economy. If growth exceeds expectations, it will likely lead to renewed dollar buying pressure.

Other economic indicators scheduled include the US wholesale inventories preliminary estimate for March, US initial jobless claims for the previous week, and the US existing home sales index for March.

In terms of speaking events, there are numerous appearances and speeches by ECB officials such as Schnabel, ECB Board member, Vujčić, Governor of the Croatian National Bank, Lagarde, President of the ECB, Weidmann, President of the German Bundesbank, and Panetta, Governor of the Bank of Italy. While a June rate cut itself has become a market consensus, there is a possibility that they may avoid discussing what comes after, leaving the future still uncertain. In the NY session, there is the scheduled auction of US 7-year bonds ($44 billion). In terms of US stock-related events, earnings announcements from companies such as Snap, Intel, Alphabet, Caterpillar, Microsoft, and T-Mobile are scheduled. Following the Meta earnings announcement yesterday, the earnings of IT giants will be closely watched amid declines in IT-related stocks.

I didn't expect the USD/JPY to rise this easily, but if it continues to rise after the US real GDP preliminary estimate, I anticipate that there will be more intervention by the Bank of Japan and profit-taking sales, so I'm considering entering short positions.