Important events today:
12:30 UTC: USD – Unemployment Rate.
The rise in the USD/JPY exchange rate increases expectations of currency intervention by Japanese authorities. “Currently, USD/JPY will be guided by UST yields and the US dollar. For USD/JPY to turn downward, the US dollar would need to reverse course or the Federal Reserve would need to cut rates, or the Bank of Japan would signal an urgent need to normalize the situation (raising rates or accelerating balance sheet reduction). None of the above seems likely,” according to OCBC strategists Francis Chung and Christopher Wong.
Following the Federal Open Market Committee (FOMC) meeting on June 11-12, Federal Reserve officials emphasized a data-dependent approach and refrained from cutting interest rates pending further observations. Some Fed officials were unsure if rate cuts were necessary, while a few policymakers indicated a need for rate hikes if inflation rebounds.
However, the dollar’s rise may be limited as recent US PCE inflation data and a weaker-than-expected PMI index in the services sector fuel expectations of a Fed rate cut this year. Later, traders will focus on US employment data for June. According to forecasts, US NFP is expected to show an increase of 190,000 jobs in June, with the unemployment rate remaining unchanged at 4%. Finally, average hourly earnings in June are expected to decrease to 3.9% year-over-year from 4.1% in May.
Recommendations: Trade predominantly with buy orders at a price level of 160.85. Consider sell orders at a price level of 160.10.ΠΌ