USDJPY renews two-month high near 160.00 with eyes on US/Japan inflation clues

It’s a quiet start to the week as traders reassess the latest data suggesting a delay in the key central banks’ rate cuts while also portraying a cautious mood ahead of national elections in the top-tier economies. Also restricting the momentum is a lack of major data/events and a light news flow. The same challenges the US Dollar bulls after the Greenback’s gauge (I.USDX) marked a three-week uptrend in the last.

USDJPY gains major attention while retreating from the highest level in two months despite mixed bias about the Bank of Japan’s (BoJ) next move. On the contrary, USDCAD, AUDUSD, and NZDUSD remain lackluster by tracking unimpressive moves of the commodities.

Further, EURUSD and GBPUSD lick their wounds at multi-day lows as growing political anxiety in the Eurozone and the UK challenge the hawkish bias of the European Central Bank (ECB) and the Bank of England (BoE) officials respectively.

Crude Oil stays defensive after retreating from a seven-week high whereas Gold price remains sideways around $2,317 short-term support.

Further, BTCUSD drops to a five-week low while extending Friday’s fall and the ETHUSD prints a three-day losing streak as traders brace for the launch spot ETH ETFs amid fears of the US SEC’s hard stand due to the latest security lapse in key providers.

Following are the latest moves of the key assets:

• WTI Crude oil prints mild gains around $80.60 after reversing from a seven-week high the previous day.
• Gold remains side-lined near $2,325 following the biggest daily slump in a fortnight.
• The USD Index eases from a seven-week high, down 0.10% intraday to 105.75 as we write.
• Wall Street closed mixed but the Asia-Pacific shares edged lower of late. That said, equities in British and Europe remain indecisive during the initial trading hour.
• BTCUSD and ETHUSD both lose more than 1.0% on a day while declining to $62,300 and $3,370 respectively at the latest.

US Dollar brace for political plays, Fed inflation after three-week uptrend…

US Dollar Index (I.USDX) remains dicey early Monday as bulls take a breather after a three-week uptrend, especially ahead of Thursday’s first debate between US President Joe Biden and his competitor for the 2024 election Donald Trump, as well as Friday’s US Core PCE Price Index data.

It’s worth noting that the indecision about China’s economic recovery and a growing dislike for Russian ties with Beijing and North Korea challenges the risk-on mood and underpin the US Dollar's strength. Also favoring the Greenback could be the headlines suggesting a likely breach of ceasefire in the Gaza Strip. Above all, the latest US PMIs for June and hawkish statements from the US Federal Reserve (Fed) officials push back the rate cut odds and propel the US Dollar.

On the other hand, the Bank of Japan (BoJ) Summary of Opinions shows the policymakers’ indecision about the promised rate hike in July, especially amid a softening in the inflation numbers of late. However, the likely bond market intervention challenges the Yen pair buyers of late, especially ahead of Friday’s Japan inflation data.

EURUSD struggles to convince buyers after Friday’s downbeat EU PMIs and political uprising of the right-wing parties in the bloc, even after hawkish comments from the ECB officials. On the same line, GBPUSD also lacks recovery momentum even as the BoE defends the current monetary policy and the UK data has been mostly upbeat.

Elsewhere, AUDUSD and NZDUSD portray the market’s dicey mood amid a light calendar but the USDCAD stays pressured after a six-day losing streak. That said, the Loonie pair’s latest gains could be linked to the upbeat prices of Canada’s key export item, namely Crude Oil. Furthermore, Gold price fails to acquire more bids even as the US Dollar retreats as the latest data about China’s gold buying appear less impressive and the Fed officials promote “higher for longer” rates.

• Strong buy: USDCAD, USDJPY, US Dollar, Silver
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Sell: DAX, FTSE 100, EURUSD, Crude Oil

German IFO data, BoC’s Macklem eyed…

Although the economic calendar doesn’t offer much to the momentum traders, Germany’s IFO survey data for June and Bank of Canada (BoC) Governor Tiff Macklem’s speech will be interesting for the intraday directions. Additionally, comments from second-tier central bank officials from the US and Eurozone will offer extra signals to the traders. Above all, Thursday’s Biden-Trump debate and Friday’s US Core PCE Price Index, also known as the Fed’s preferred inflation, will be crucial to watch for a clear guide. Elsewhere, inflation data from Australia and Japan, as well as mid-tier statistics from the Eurozone and the UK could direct the respective currencies.

May the trading luck be with you!