Ella 
Asian stock markets opened quietly on Thursday. Affected by multiple factors such as changes in U.S. corporate earnings reports, the strengthening of the U.S. dollar, and the gradual increase in U.S. bond yields, investors’ investment sentiment towards high-risk assets generally weakened.
The Japanese yen has once again become the focus of the market as it continues to fall, even if the market has so far ignored Japan’s warnings. This acts as a support for the US dollar, which is likely to collide with GBP 156. However, Bank of Japan Governor Kazuo Ueda made it clear that currency fluctuations could prompt a policy response from the Bank of Japan (BoJ), and hedge funds may be reluctant to take risks ahead of U.S. inflation data next week.
On the economic front, there are several indicators and events that could move markets on Thursday, but the global focus remains on next week’s U.S. inflation data.
Sweden’s latest interest rate cut highlights the widening gap between the policy paths of the European Central Bank (ECB) and the Federal Reserve, which could pave the way for rate cuts by the European Central Bank (ECB) and the Bank of England (BOE) in June. Although U.S. economic data is expected to be weak, the dollar is still boosted by the possibility that policy differences will be maintained.
However, while these developments may appear influential on the surface, it is important to recognize that the main drivers of the dollar are U.S. economic data and Federal Reserve policy actions. While international monetary policy decisions may affect foreign exchange markets, the health of the U.S. economy and Federal Reserve decisions have the greatest impact on the direction of the U.S. dollar.
Markets expect the dollar to trend lower as the market responds to weaker U.S. economic data and adjusts its expectations for the Fed’s policy bias, anticipating a more dovish Fed.
