Bonda Asia: The US dollar weakened and oil prices rose, and the US dollar and Canadian dollar closed slightly lower

On August 12, Makoto Sakurai, a former member of the Bank of Japan's board of directors, said in an interview last Friday that the Bank of Japan will not be able to raise its policy rate again this year, given the market turmoil caused by the central bank's recent rate hike and the low possibility of a rapid recovery in Japan's economy. "At least for the rest of the year, they will not raise interest rates again. Whether there will be a rate hike before March next year is hard to say." The recent market turmoil and the Bank of Japan's response to it have made market participants cautious about the outlook. The overnight index swap market shows that the probability of a rate hike before the end of the year is much lower than after the Bank of Japan's July rate hike. Sakurai is also cautious about this. "It's a good thing that they decided to move from a world of almost zero interest rates to a normal 0.25% in the process of returning to normal monetary policy," Sakurai said. But he added that the move would take too much energy, so for further rate hikes, "they should wait a while."

In addition, Goldman Sachs recently pointed out that the US non-farm payrolls report in July showed that the weakness of labor market conditions has exceeded expectations, with both wages and household employment growing weakly, and the unemployment rate rising further by 0.2 percentage points to 4.3%. Therefore, we have raised the probability of a recession in the United States by 10 percentage points to 25%, and expect the Federal Reserve to cut interest rates by 25 basis points in September, November and December (previously, it was once a quarter). However, Goldman Sachs also said that despite this, it is usually wrong to infer too much from a single employment report without a major economic shock that suddenly changes the situation. We believe that the risk of rising unemployment in the near future is lower than in the past, partly because more than 70% of the increase in the US unemployment rate in July was attributed to temporary layoffs, which may be reversed in the coming months.

The data to watch today include the monthly rate of industrial output in the UK in June and the 1-year inflation expectations of the New York Fed in July.

Gold/USD

Last Friday, gold fluctuated upward and closed slightly higher on the daily line. The current exchange rate is trading around 2434. In addition to the continued support for gold by short covering, the expectation of multiple interest rate cuts by the Federal Reserve this year also continues to support gold. In addition, the decline of the US dollar index (103.1353, 0.0063, 0.01%) and the risk aversion sentiment in the market also provide some support for gold. Today, we will focus on the pressure around 2450, and the support below is around 2420.

USD/JPY

Last Friday, the USD/JPY fluctuated downward, and the daily line closed slightly lower. The current exchange rate is trading around 147.20. In addition to the technical selling formed by profit-taking and the 148.00 mark, which has put some pressure on the exchange rate, the weakening of the US dollar index under the pressure of the Fed's expectations of multiple interest rate cuts this year is also an important factor in pressuring the exchange rate to fall. However, the former Bank of Japan official ruled out that the Bank of Japan may raise interest rates again this year, which may limit the downside of the exchange rate. Today, we will focus on the pressure around 148.00, and the support below is around 146.00.

USD/CAD

Last Friday, the USD/CAD fluctuated and consolidated, and the daily line closed slightly lower. The current exchange rate is trading around 1.3730. In addition to the weakening of the US dollar index, the Fed's expectations of rate cuts this year also continue to put pressure on the exchange rate. In addition, the rise in crude oil prices also puts pressure on the exchange rate. Today, we will focus on the pressure around 1.3800, and the support below is around 1.3650.