[Focus on U.S. Michigan Sentiment] A Calm Market Seeking Direction
✅ Overall Market Sentiment
This week’s forex market has seen significant swings after reports that Fed Chair Powell might be dismissed, followed by a denial from former President Trump. USD/JPY moved sharply from the 146 range to the 148 range, but now appears to be stabilizing, supported by strong equity markets, with the dollar maintaining a bullish tone against the yen.
USD/JPY: Volatile between upper 146 and 148 levels, now regaining stability
Dollar Index (DXY): Trading above its 10- and 21-day moving averages, keeping its upward trend since early July
✅ Recent U.S. Economic Data Review
Overall, recent U.S. indicators have been strong:
CPI (Consumer Price Index): In line with forecasts but faster than previous → persistent inflation pressure
PPI (Producer Price Index): Below forecasts → producer prices remain on a slowing path
Retail Sales: Beat expectations → confirms resilient consumption
Industrial Production: Strong results → suggests a manufacturing recovery
Despite this, market expectations for a rate cut later this year remain broadly unchanged.
✅ Key Events Today
U.S. Housing Data (June)
Housing Starts: Forecast 1.30M (previous 1.256M)
Building Permits: Forecast 1.387M (previous 1.394M)
University of Michigan Consumer Sentiment Index (Prelim, July)
Forecast: 61.5 (previous 60.7)
Inflation Expectations: 1-year outlook seen steady near 5%
Fed Commentary
Governor Waller will appear on Bloomberg TV
Previously noted a 25 bp cut at next FOMC would be appropriate (still a minority view)
CME FedWatch: Market pricing over 95% chance of no change
Other Developments
U.S.–EU trade talks under watch
German Chancellor Merz: “Possibility of an asymmetric agreement”
✅ Market Outlook & Trade Strategy
USD/JPY: Lacking strong direction, but maintaining levels near 148 supports a buy-on-dips stance.
Key risk: University of Michigan sentiment later today
If above forecast: Renewed dollar buying likely
If below forecast: Break below 148 could trigger a correction
📌 Summary
Focus today is on U.S. consumer sentiment strength.
Will the dollar trend remain firm or take a breather?
The Michigan index will be the key driver for market direction.
