Forex Top Team

Awaiting Tomorrow’s PCE Deflator Announcement: Dollar Strength Might See Some Adjustment

Market Summary

In yesterday’s overseas market, the USD/JPY exchange rate surpassed the psychological level of 160 yen, reaching a high of approximately 160.87 towards the end of New York trading. Despite Japan’s Vice Finance Minister Kanda’s statement around 10 PM JST about being ready to intervene anytime, the market’s response was muted, seemingly unimpressed by the statement’s impact. Today, the pair has pulled back to around 160.30. Similarly, the overall dollar strength has taken a breather today, with EUR/USD rebounding from the upper 1.06 levels to near 1.07 and GBP/USD showing a slight bounce in the low 1.26 range.

The market sentiment is predominantly one of anticipation for tomorrow’s US PCE deflator announcement. Given this context, it is likely that adjustments to current dollar buying and yen selling positions may occur today.

Upcoming Economic Indicators

Several economic indicators will be released in the upcoming overseas market sessions, including:

  • Philippine Central Bank Policy Rate (June)
  • Swedish Central Bank Policy Rate (June)
  • Eurozone Consumer Confidence Index (Final) (June)
  • Eurozone Economic Sentiment (June)
  • South Africa Producer Price Index (May)
  • Turkish Central Bank Policy Rate (June)
  • Mexican Unemployment Rate (May)
  • Mexican Trade Balance (May)
  • US Wholesale Inventories (Preliminary) (May)
  • US Real GDP (Final) (Q1 2024)
  • US Durable Goods Orders (Preliminary) (May)
  • US Initial Jobless Claims (June 16 – June 22)
  • US Pending Home Sales Index (May)
  • Mexican Central Bank Policy Rate (June)

Emerging market central bank policy rate announcements are expected to largely maintain current rates, with central banks that have begun rate cuts likely adopting a wait-and-see approach due to recent inflation pressures.

Most of the US economic indicators will be released around 9:30 PM JST. However, with the market eagerly awaiting tomorrow’s US PCE deflator results, reactions to today’s data might be muted unless extreme results are observed.

Scheduled Speeches and Events

There are several noteworthy events and speeches scheduled, including:

  • Müller (Estonia Central Bank Governor) and Kazimír (Slovakia Central Bank Governor) participating in events and delivering speeches.
  • Publication of the Bank of England’s Financial Stability Report and meeting minutes.
  • Deputy Governor Hauser of the Reserve Bank of Australia attending an economic forum.
  • The US will conduct a 7-year note auction ($44 billion).
  • The first US presidential debate in the key battleground state of Georgia, Atlanta, which is expected to be a significant event.

Market Strategy

Today, the focus is on whether the Bank of Japan will intervene in the USD/JPY market as it hovers around the 160 yen level. If intervention occurs, it may lead to temporary selling of the US dollar. However, such a move is not expected to be long-lasting, and the USD/JPY is anticipated to rebound. If intervention leads to a dip, the plan is to buy at the lower levels.

More Insights

12th in July 2024, Today’s Options

EUR/USD: EUR amounts 1.0650: €1.8 billion 1.0690: €1.1 billion 1.0695: €873 million 1.0700: €896 million 1.0800: €1.7 billion 1.0850: €2.4 billion 1.0900: €934 million USD/JPY:

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