The U.S. CPI was higher than expected, with price increases in items such as food, apparel, auto insurance, and airfare; NY Fed President William and Chicago Fed President Goolsbee advocated for continued rate cuts, while Atlanta Fed President Bostic suggested that the rate may be left unchanged.

The released FOMC meeting summary showed a split between the 0.5% rate cut and the 0.25% rate cut camp. The majority favored following Chairman Powell’s lead and cutting rates sharply, but there was no hesitation within the Fed to slow down the pace of rate cuts.

With the U.S. economy doing well, a rate cut may be more difficult to achieve. If that is the case, the dollar will be strong. As the dollar approaches 150 yen, we are beginning to hear cautionary comments from the Japanese Ministry of Finance side about a weaker yen, but if U.S. interest rates rise, a dollar rally is inevitable.

In China, additional economic stimulus measures were expected to be announced by China’s National Development and Reform Commission after National Day, but additional large-scale stimulus measures were not expected as the 5% growth target is feasible. China’s CSI 300 Index surged 11% at one point but ended 5.9% higher. The Hong Kong Hang Seng Index closed 9.4% lower. Even though expectations were too high in advance, and the Australian dollar had also risen on the Chinese economic revival, it fell to 0.6720 against the dollar and 99.10 yen against the yen. New Zealand cut its interest rate by 0.5%. The statement was also dovish, which sold off the NZ dollar.

In Japan, Bank of Japan Deputy Governor Himino spoke, and the relatively hawkish deputy governor made it clear that normalization is the prescribed course, as real interest rates are significantly negative, and the dollar temporarily fell below 149 yen.

However, the Israeli attack on Iran has not yet started, and if the Israeli attack is so fierce that the fighting escalates, the market will become a risk-off market at once, so we need to be careful about that.

The ECB is expected to cut interest rates next week, which will be positive for the dollar and keep the dollar in an uptrend.