Stock prices in Japan and the US are performing well. In the US, Nvidia has reached a new high on expectations that semiconductors will grow further due to AI demand, significantly outperforming Microsoft. With IT-related stocks performing well, the Nasdaq is near its highest level, and the Nikkei average rose 642 yen, but the yen strengthened in the foreign exchange market. This is due to a report in the Wall Street Journal that ‘Trump is considering an early nomination for the next Federal Reserve Chair.’ This impact has spread to the Nikkei, with stock prices, which had been hesitant due to concerns over the closure of the Strait of Hormuz, surging past the 40,000 yen mark.

Despite this, the foreign exchange market has not seen a ‘risk-on’ yen depreciation trend. This is likely due to strong expectations that the U.S. will move toward interest rate cuts, leading to a weaker dollar.
However, in the current conflict in the Middle East, President Trump, who took a chance, has emerged victorious. There are still risks, but I think it is okay to give the president credit for this.
The price of gold is becoming a little heavy. The risk in the Middle East has been reduced. The next question is whether the war in Ukraine can be ended, but Russia was completely powerless against Iran in its adversity. If resource prices fall, Russia will be in a tight spot.

In congressional testimony, tough questions were directed at Chairman Powell. The logic is that it is strange not to return to a neutral interest rate when inflation is falling. The next Fed chair will be quite dovish, in line with President Trump’s wishes. If that happens, the dollar will be sold off considerably. In the short term, it was a week of dollar selling, so the end-of-month rebalancing will be dollar buying, but recently, the market has not moved much due to end-of-month rebalancing. There is no need to worry too much about it. Not only did the dollar weaken against the euro and the yen, but it also weakened against Asian currencies. Is this a sell-off of the dollar?