+$127,371　Will the Yen Continue to Depreciate? Focus on U.S. CPI and Powell's Speech!

Trade Performance from July 1 to July 5: Total +$127,371

It was a successful week for all trades except cryptocurrencies.

Since the start of July, the FX market has been highly focused on the U.S. employment report and the USD/JPY movements. While the USD/JPY experienced significant fluctuations due to speculations of rate cuts driven by U.S. inflation indicators, the underlying trend of yen depreciation remains strong, with solid support at the lower levels. For the Japanese yen, if there is substantial buying, I plan to target selling opportunities on the rebound.

Key Points Moving Forward:

1. Focus on U.S. CPI and Federal Reserve Chairman Powell's Testimony

The main event next week is the release of the U.S. Consumer Price Index (CPI) for June on the 11th. Although the previous May CPI slightly missed market expectations, it did not significantly alter the U.S. interest rate outlook. Currently, the market is pricing in a 60% chance of a rate cut in September and a 40% chance in December, indicating that rate cuts are not fully priced in yet. The CPI results could greatly alter these expectations.

Additionally, while the yen continues to hit historic lows against the dollar and other currencies, the Japanese government and Bank of Japan have so far only issued verbal interventions without any concrete measures to combat yen depreciation. This persistent outlook of a weaker yen among overseas investors remains unchanged. Even if there is a currency intervention, its effects might be short-lived.

Next week, in addition to the U.S. CPI, Federal Reserve Chairman Jerome Powell will testify before the Senate Banking Committee on the 9th and the House Financial Services Committee on the 10th, providing insights into monetary policy. Also, on the 12th, the U.S. Producer Price Index (PPI) for June and the preliminary University of Michigan Consumer Sentiment Index for July will be released.

(Source: Trader's Web)

Given the rising speculation of rate cuts, the U.S. CPI on the 11th will be crucial. If signs of easing inflation appear, it could further accelerate USD selling.

2. Focus on RBNZ Statement

In New Zealand, the Reserve Bank of New Zealand (RBNZ) will hold its Monetary Policy Committee (MPC) meeting on the 10th. The policy rate is expected to remain at 5.50%, and attention will be on the statement. The RBNZ previously forecasted that consumer price inflation would return to its target range of 1-3% by the end of this year and expected to start cutting rates in the July-September quarter of 2025. However, market speculation for an earlier rate cut remains strong, and this statement will be scrutinized for clues on monetary policy. No new economic outlook is expected to be released at this MPC meeting.

(Source: Gaika Online)

Depending on the statement, there could be movement in either direction. I plan to enter positions flexibly based on the market flow.

Key Points for Each Currency:

**USD (U.S. Dollar): Neutral to Buy**
- Key focus next week is the U.S. CPI for June on the 11th. While the May CPI slightly missed expectations, it did not significantly change the U.S. interest rate outlook. Currently, there is a 60% chance of a rate cut in September and a 40% chance in December, indicating rate cuts are not fully priced in. The CPI results could significantly alter expectations. Attention will also be on Powell's testimony, PPI, and the University of Michigan Consumer Sentiment Index.

**JPY (Japanese Yen): Sell**
- The yen continues to hit historic lows against both the dollar and other currencies. Despite verbal interventions from the government and the Bank of Japan, no actual measures have been taken, and the outlook for a weaker yen remains strong. Even if there is currency intervention, it is expected to have a temporary effect, and the outlook for a weaker yen continues.

**EUR (Euro): Neutral**
- The euro is expected to see nervous movements ahead of the French National Assembly elections. Although the National Rally (RN) topped the first round of voting, the ruling party and left-wing coalition have unified their candidates, reducing the likelihood of an RN majority. However, a hung parliament could lead to political instability.

**AUD (Australian Dollar): Buy**
- The Australian dollar is expected to remain firm. The RBA has kept rates on hold but remains cautious about the risks of higher inflation. Core inflation in Australia is on the rise, and expectations for a rate hike at the next board meeting are increasing. The rate hike probability in the futures market is about 30%, and attention will be on upcoming data.

**NZD (New Zealand Dollar): Neutral**
- The RBNZ MPC meeting on the 10th is the key event. The policy rate is expected to remain at 5.50%, and the statement will be closely watched. While the RBNZ expects to start cutting rates in the July-September quarter of 2025, market speculation for an earlier rate cut remains strong.

**ZAR (South African Rand): Neutral**
- The South African rand is expected to see nervous movements. The formation of a new cabinet was a positive development, but the impact was temporary. No major economic indicators are scheduled for next week, but the SARB MPC meeting the following week could influence movements.

**GBP (British Pound): Neutral to Buy**
- The pound is expected to see movements influenced by the results of the general elections in the UK and France until mid-week. The Labour Party is expected to take power for the first time in 14 years, and attention will be on the specific number of seats. The election results could change the risk sentiment.

**CAD (Canadian Dollar): Neutral**
- The Canadian dollar is expected to be influenced by the impact of the June employment report in the first half of the week. Expectations for additional rate cuts have diminished due to higher inflation indicators. In the latter half of the week, the U.S. June inflation indicators will be crucial, and the results will determine the direction of the dollar.

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P.S.

It has been nine months since Israel invaded Gaza in October 2023, and they continue to bomb and destroy Gaza extensively.

There are articles asking, "When will it end?" but to conclude, Israel's attacks will not end until the region is completely destroyed.

Although not widely reported in the news, the main driver behind Israel's actions is not Hamas' activities, but the rights to large gas fields. Israel aims to completely destroy Gaza and build infrastructure to expand natural gas production and secure safe transport routes for gas.

The Leviathan gas field has confirmed reserves of 22 trillion cubic feet, enough to supply Israel's needs for 100 years. Additionally, the Tamar gas field has reserves of 10 trillion cubic feet, and the Gaza Marine has 1.4 trillion cubic feet.

Thanks to these gas fields, Israel is now a natural gas exporting country. Western countries also hope to import gas from Israel to compensate for the loss of Russian gas supplies.

So, instead of following the surface-level news, it might be easier to predict future trends by following the flow of money.

Have a great weekend!