Dollar buying dominated March, but the momentum has dulled; focus on whether USD/JPY will test 152 yen again
March has seen a dominance in buying the dollar. Initially, there was a strong move towards dollar weakening, but since mid-March, the flow of dollar buying has strengthened, pushing the dollar index to its highest level in over a month. Today, USD/JPY was bought up to around 151.97 at one point, surpassing last year's and the year before last's highs, reaching a 34-year high. However, it has not yet managed to sustain above the 152 yen level and is watching for another opportunity to challenge it.
Looking over March, the Swiss franc has been the weakest against the dollar, affected by an unexpected rate cut. The Nordic currencies and the New Zealand dollar are also in the weaker group, followed by the yen showing relative weakness. The Australian dollar is the only currency showing some resilience against the dollar.
The general backdrop for the strong dollar includes persistent U.S. inflation expectations, early rate cut expectations from various central banks in contrast, and the Bank of Japan's gradual normalization stance. Today, the interpretation of remarks by Bank of Japan Policy Board Member Tamura also caused fluctuations in the yen exchange rate. Essentially, the intention is to proceed with normalization, but it appeared to be viewed with caution.
Economic indicators to be released in the overseas market include the U.S. MBA mortgage applications index (03/16 - 03/22) and the South African Reserve Bank's policy rate for March. These indicators might lack the force to move the market significantly.
In terms of speaking events, lectures and press conferences by ECB's Cipollone, Latvian Central Bank Governor Kazāks, Swiss National Bank Vice President Schlegel, and FRB's Waller are scheduled. The hawkishness of FRB's Waller is likely to be in focus.
The bearish perspective on the Swiss franc continues. Today, with the mood leaning towards yen appreciation due to the tripartite talks, I have already entered a sell position in CHF/JPY.
