At the start of the week, the yen continues to depreciate, driven by buying of European currencies like the euro. EUR/JPY has risen to the 173 yen range, and GBP/JPY has climbed to 204 yen. The first round of France’s National Assembly elections saw the far-right party become the largest, followed by left-wing and ruling party forces. This has slightly alleviated market concerns about France’s political uncertainty.
USD/JPY remains high around 161 yen after last week’s US PCE deflator release, confirming a slowdown in US inflation. Although short-term financial markets still anticipate two rate cuts this year, recent comments from US financial authorities have cast doubt on this, with sentiment leaning slightly hawkish. Despite surpassing the 160 yen mark, market intervention concerns do not seem overly strong.
Key economic indicators to watch include Swiss retail sales (May), Swiss manufacturing PMI (June), Nationwide House Price Index (June) from the UK, final manufacturing PMI (June) from France, Germany, the Eurozone, the UK, and the US, German CPI (preliminary) (June), US construction spending (May), and the ISM Manufacturing Index (June).
Speeches from Nagel, President of the Bundesbank, and Lagarde, President of the ECB, are also scheduled. Hong Kong and Canadian markets are closed for public holidays.
Today, attention is focused on the flow of USD after the ISM Manufacturing Index. Planning to enter based on the subsequent movements.
