On Friday, 1 August, the US July employment statistics were released, showing a significant downward revision in employment figures for May and June, causing the dollar to fall sharply.
What does this significant downward revision imply? If it indicates that the U.S. economy has actually slowed significantly, the Federal Reserve (Fed) is likely to move to cut rates sooner than expected. According to CME FedWatch, the market has begun to price in three rate cuts this year. If the Fed cuts rates sooner than expected and the Trump administration continues its arbitrary exercise of power, the dollar-yen sell-off driven by dollar weakness is likely to persist.

The Bank of England cut rates by 0.25% as expected, bringing the policy rate to 4.00%. However, the decision was a very close 5-4 vote, causing the pound to rise.
With the euro having been strong recently, the euro-pound pair had been in an upward trend, so the decline in the euro-pound pair was sharp. As a result, the euro-dollar pair softened from around 1.1675 to around 1.1640.
However, the euro-dollar is clearly returning to an upward trend. The upcoming meeting between President Trump and President Putin is also a positive factor. The possibility of a ceasefire between Russia and Ukraine in the near future is also a positive factor for the euro.

In addition, the Swiss franc, which has been subject to high tariffs in the United States, is also falling, but the end of the war will lead to selling of the Swiss franc. In the short term, long pound and short Swiss franc positions may also be promising.
The dollar-yen exchange rate is firmly in the 146 yen range, but it is unlikely to rise above 148 yen. The market remains in a state of equilibrium between sell-offs and dip buying, but if it breaks out, it is likely to be in a downward direction.

The US economy is currently strong, but there is a high possibility of growth slowing down after the summer due to the impact of tariffs. The US is currently in the best position, but by autumn, the economic situation is likely to accelerate the selling of the dollar.

In Japan, Taro Kono stated that ‘the Bank of Japan should have been asked to raise interest rates to induce yen appreciation.’ However, Kono’s political influence has declined in recent years, so the impact was limited. Nevertheless, at a recent press conference, Governor Ueda made remarks that made it seem highly unlikely that interest rates would be raised by the end of the year, so it appears that the government is also considering such a move.
Inflation expectations remain unchecked, and with the minimum wage having been set at a relatively high level, Japan’s inflation rate is likely to remain elevated.

Reports that Stephen Miller had been nominated to fill the vacant seat on the Federal Reserve Board accelerated the selling of the dollar, causing it to fall to around 146.72 yen. However, real demand buying before the Obon holiday supported the market, and while the Nikkei average rose by more than 900 points at one point, risk-on dollar buying pushed the dollar-yen exchange rate up to around 147.89 yen.
Export companies have suffered significant losses due to Trump’s tariffs, and domestic demand has not picked up significantly, so players who had been shorting Japanese stocks likely bought back their positions at a loss.
However, it is unlikely that U.S. interest rates will rise significantly in the future. U.S. interest rates are expected to decline, but Japan’s rates are likely to remain unchanged for the time being.