BOJ showcases a willingness to hike rates further

The BOJ’s 日銀の前回会合に関する意見要旨は for their July meeting was released during today’s Asian session. Within the statement, it appears that BOJ policymakers debated on whether or not to raise the monetary policy rate even further, having stated that “The current economic situation seems to be favorable enough that the Bank can raise the significantly low policy interest rate to some degree”. The mention that the interest rates are “significantly low” tends to imply a willingness by the bank to raise rates more aggressively, which in turn may aid the JPY. However, the recent developments in which the carry trade appears to be unwinding, in combination with some concerns about the ‘health’ of the global financial markets, may disrupt the BOJ’s ambitions. Moreover, in the SOP the neutral rate “seems to be at least around 1%”. Nonetheless, the overall document appears to have been hawkish in nature. RBA Governor Bullock’s comments yesterday appear to have been hawkish in nature, with the Governor stating per Reuters that the bank won’t hesitate to raise rates if needed. The implications of the RBA hiking interest rates could potentially aid the Aussie. Our concern is that should interest rates remain higher for longer with the possibility of more rate hikes in the future, it could bring the Australian economy to the brink of a recession, which may force the bank’s hand.In Canada, the Ivey PMI figure for July, came in lower than expected, which may imply that the manufacturing sector of the Canadian economy continues to expand, but at a slower pace than expected which could weigh on the Loonie should other financial releases imply a possible slowdown of manufacturing activity. According to the FT, Google (#GOOG) and Meta (#FB) made a secret deal to target advertisements for Instagram to teenagers on YouTube. The plot to “target 13- to 17 – year old Youtuber users”, could weigh on their stock prices.

AUD/USD appears to be moving in a upwards fashion. We opt for a bullish outlook for the pair and supporting our case is the upwards moving trendline which was incepted on the 5 of August. Yet the RSI indicator below our chart currently registers a figure near 50, implying a neutral market sentiment. Nonetheless, for our bullish outlook to continue, we would require a clear break above the 0.6575 (R1) resistance line, with the next possible target for the bulls being the 0.6690 (R2) resistance level. On the flip side, for a sideways bias we would require the pair to remain confined between the 0.6475 (S1) support level and the 0.6575 (R1) resistance line. Lastly, for a bearish outlook we would require a clear break below the 0.6475 (S1) support level, with the next possible target for the bears being the 0.6365 (S2) support line.

US100 appears to be moving in a downwards moving fashion. We continue to maintain our bearish outlook for the index and supporting our case is the RSI indicator below our chart which currently registers a figure near 40 implying a bearish market sentiment.For our bearish outlook to continue, we would require a clear break below the 17900 (S1) support line with the next possible target for the bears being the 17000 (S2) support line. On the flip side for a bullish outlook, we would require a clear break above the 18830 (R1) resistance line, with the next possible target for the bulls being the 19500 (R2) resistance level. Lastly, for a sideways bias we would require the index to remain confined between the 17900 (S1) support line and the 18830 (R1) resistance level.

その他の注目材料

Today in the European session, we get the Czech Republic’s unemployment rate and during the American session we get the US weekly initial jobless claims figure. In tomorrow’s Asian session we get China’s CPI rates for July. On a monetary level we note the speech by Richmond Fed President Barkin in today’s late American session.