Dollar strong before Warsaw, and after Bessent's comments
Yesterday Treasury Secretary Scott Bessent said he expects fairly good readings, which should not be too surprising given the possible increase in seasonal workers due to the ongoing World Cup.
Yesterday the JOLTS data for May also looked good, which is a more "structural" measure of the labor market – comparing it with recent NFP readings is another proof of its strength and important information for the Fed. Today's panel in Sintra organized by the ECB will start at 15:00. In addition to the Fed Chair, the presidents of the Bank of England, the Bank of England, and the European Central Bank will also participate.
Markets focus on the yen
It is not excluded that the market links excessive expectations with what Kevin Warsh may say today. He may be more "cautious" in his words, sticking to his motto that forward guidance is unnecessary.
The markets still focus on the yen after USDJPY continues to move up after breaking 162. The representative of the finance ministry (Mimura) indicated that he remains in constant contact with the American side, which expressed understanding of the need to intervene in the currency market.
The market seems to say all this – I check. Theoretically a good moment for such actions could be Friday afternoon and Sunday evening – an important context for lower liquidity during the U.S. session due to Independence Day holidays in the U.S. The yen market did not react much to good Tankan activity data for Q2, which reinforce the narrative of another rate hike in Japan in Q4.
Today in the macro calendar we are already after the publication of some PMI indices for industry for June. The indicator for China came out slightly weaker (51.7 points), while in Europe it is mixed – better readings from France and Germany (51.2 points and 50.3 points), but worse from Spain (49.7 points) or Italy (52.2 points).
Switzerland also performed poorly with a result of 54.3 points versus 57.3 points in May. We still have PMI data from the UK (10:30) and the US (15:45).
More important will be the preliminary CPI inflation readings in the euro zone (11:00), ADP data from the US (14:15), the mentioned conference in Sintra (15:00), and the ISM manufacturing reading (16:00).
EURUSD - extended oscillations around 1.14
The EURUSD pair is hovering around 1.14. Recent comments from ECB officials suggest that the second rate hike this year is less likely (oil decline, low risk of a second inflation round, etc.), which in total is not a surprise.
Attention will therefore focus on what Warsh will say today, but also on the US data (today ISM, tomorrow NFP). Nevertheless, it is worth keeping in mind the USDJPY market situation – a potential intervention moving USDJPY down could indirectly affect EURUSD as well.
Daily EURUSD chart
