The Asian markets opened the week with relatively quiet movements. The USD/JPY and cross-yen pairs are on the rise, signaling a pause in last week’s risk-off trend. It is believed that about half of the sudden unwinding of yen carry trades has already occurred, contributing to market stability. However, the significant interest rate differential between Japan and the U.S. remains, and if the market stabilizes, the flow of selling low-yield currencies and buying high-yield currencies may return. Nevertheless, the significant market fluctuations from last week have made investors more cautious.
Tomorrow, the U.S. Producer Price Index (PPI) will be released, followed by the Consumer Price Index (CPI) the day after. These indicators will significantly influence expectations for an early rate cut in the U.S., and investors are likely waiting to assess the results before making any significant moves.
Currently, the yen is trending weaker, but whether this trend will continue in overseas markets needs to be carefully monitored.
Today’s scheduled economic indicators include India’s Consumer Price Index (July) and Industrial Production Index (June), Canada’s Building Permits (June), and the New York Fed’s Inflation Expectations Index from the U.S. However, given the upcoming U.S. inflation data, the market’s reaction to these indicators is expected to be limited.
In terms of events, the OPEC monthly report on crude oil will be released. There are no major U.S. corporate earnings announcements scheduled for today.
As we approach the U.S. CPI release, there is a possibility of a gradual increase in dollar selling. Continue to approach USD/JPY with a cautious sell bias.
