Total trading from June 26 to July 1 resulted in a gain of +40,522 USD.
The week started with a move towards a stronger yen after Finance Minister Kanda made statements suggesting a curb on yen depreciation. This led to selling of the USD/JPY pair, but contrary to expectations, the trend pushed it into the 145 yen range, triggering a major stop loss.
Subsequently, the market focus shifted to the Consumer Price Index (CPI) in Canada, which hit a low of 3.4%, the lowest since June 2021. This resulted in accelerated selling of the Canadian dollar. By switching to a trading strategy centered on selling the Canadian dollar, we managed to end the week with a profit.
In countries other than Japan, there have been rapid interest rate hikes, and inflation appears to be gradually slowing. Looking ahead, we expect to see more currencies being sold as inflation slows down. If we can ride this trend well, we would like to increase our profits.
Key points to watch for the week starting July 3 are:
- Keep an eye on US employment data for June
The USD/JPY will be assessing June’s employment figures and ISM manufacturing/non-manufacturing business activity indices to gauge the possibility of additional rate hikes at the Federal Open Market Committee (FOMC) meeting on July 25-26. June’s employment data is expected to show an unemployment rate of 3.6%, an improvement from May’s 3.7%, and non-farm employment is expected to increase by 213,000 from the previous month, a slower pace of increase than May’s 339,000. In addition to these figures, we’ll also be watching average hourly earnings in the employment statistics, as well as employment and price indices in the ISM manufacturing/non-manufacturing business activity indices for June. Depending on these numbers, we may see the possibility of a hawkish skip or pause at the July FOMC, for the second meeting in a row.
(Source: Trader’s Web)
It’s an important week with key figures that will help gauge a rate hike in July. We anticipate a week where the USD will make significant moves. We plan to ride the trend after scrutinizing the numbers.
- Australia’s May CPI rises less than expected, easing pressure for rate hikes
Australia’s Consumer Price Index (CPI) rose 5.6% year-on-year in May, below economists’ expectations of 6.1%, according to the Australian Bureau of Statistics. The slower than expected slowdown in inflation from April’s 6.8% could provide the Reserve Bank of Australia with a reason to halt the interest rate hikes it has been carrying out since last May, at its next policy meeting on July 4.
(Source: Bloomberg)
We’re shifting to a selling position on the AUD.
P.S.
This week we noted an interesting story about Bank of Japan Governor Ueda, who reportedly made a series of jokes at the ECB Forum. But upon watching the actual discussion, it seemed less like he was joking and more like he was simply speaking his mind… which was perhaps perceived positively because most people don’t usually speak so candidly.
One comment that drew media attention as a joke was his attribution of yen depreciation to the interest rate hikes by the central banks of the U.S., U.K., and Europe. But this is far from a joke, and is in fact, quite true.
The strength or weakness of a currency often depends on a comparison with other currencies. With the U.S. dollar, euro, and British pound undergoing aggressive rate hikes to curb inflation, the Japanese yen, which is easing monetary policy, is inevitably heading towards depreciation, no matter what it does
