For now, while the yen’s selling pressure advances, there is downside risk for the EUR/USD
In Japan's only FX specialty magazine "FX Sōryaku.com," the popular series "The Future of the Foreign Exchange Market" exceeded 130 installments. We will also ask economist Tomotaro Tajima what he predicts about how the markets, which move daily, will continue to move in the future.
Profile of Tomotaro Tajima
Tajima Tomotaro. Economic analyst. CEO of Alfinaunts. Born in Tokyo in 1964. After graduating from Keio University, he shifted from Mitsubishi UFJ Securities, where he worked, to pursue analysis and research spanning finance and the economy in general, strategic corporate management, and ultimately individual wealth formation and fund management. He serves as lecturer at lectures, seminars, and training organized by private companies, financial institutions, newspapers, local governments, and various chambers of commerce and industry, with around 150 lectures annually. He has numerous serialized writings and comments in print media such as Weekly Gendai "Rules of Net Trading" and Examina "Money Maestro Training Course." He has written columns on many websites about stocks and foreign exchange, earning high regard as a stock and FX strategist. He also writes for Home Economics in Kodansha's "Gendai Yōgo no Kiso Chishiki." He has regular appearances on TV (TV Asahi "Yaji Uma Plus," BS Asahi "Sunday Online") and radio (MBS "Mecha-chan no Asaichi Radio"), and currently serves as a regular commentator on Nihon Keizai Shimbun CNBC's "Market Wrap" and Daiwa Securities Information TV's "Economy Marche." His main DVDs include "Very Easy to Understand: Tajima Tomotaro's FX Introduction" and "Very Easy to Understand: Tajima Tomotaro's FX Practical Technical Analysis." His major books include "Wealth Reassessment Manual" (Paru Publishing), "FX Chart 'Formula for Profit'" (Alchemix), "Why Can FX Make You Wealthy?" (Texts), among many others. The latest volume is "Profiting by Riding the Rising U.S. Economy" (Jiyu Kokuminsha).
Table of Contents
- ChinaEvergrande Group’s Liquidity Deterioration
- Dollar/Yen briefly rebounded at the end of last week
- Dollar/Yen and Euro/Dollar outlook
Article body: 1,431 characters (Paid portion: 748 characters)
Liquidity deterioration of the Evergrande Group in China
The liquidity deterioration of the China Evergrande Group has been unsettling the market. For the time being, it appears to have paused toward the end of last week, but the interest payment on the dollar-denominated bonds due on the 23rd has moved to a "30-day grace period," and at least during that period one cannot completely lower guard.
There are past examples of interest payments being made during the grace period, but at this stage, authorities are only urging bondholders to communicate clearly with the corporate borrowers. Furthermore, the biggest issue is that the true intentions of President Xi are not visible, which makes matters particularly troublesome. The drastic deterioration in Evergrande's liquidity was directly triggered by authorities' restrictions on real estate lending, and as a result, it is difficult for authorities to lend a helping hand easily to the distressed companies.
Dollar/Yen briefly rebound at the end of last week
Anyway, last week, major global markets, including the U.S. and Japan, saw substantial rebounds, and even the temporary rally in the yen was not unwound.
As a result, the dollar/yen which had fallen to around 109.10–20 on the 21st rebounded for three consecutive days from the 22nd and temporarily approached 110.80 by the close on the 24th. During this process, the 21-day moving average, the 89-day moving average, and the daily Ichimoku cloud were sequentially broken above, making the technical setup skew toward a bullish market.
Note that the current bullish turn in USD/JPY is also partly due to the market re-focusing on the results of the Federal Open Market Committee (FOMC) meeting held last week. As is known, the message from this FOMC was slightly more hawkish than expected. The reason for adding "slightly" is that — —
