Yen Resurgence! Will Next BoJ Week Sustain the Rally?

Tuesday, 30 July 2024, 16:00 – US CB Consumer Confidence (Jul)

The U.S. Conference Board reported a slight decline in the US Consumer Confidence Index (CCI) for June 2024, dropping to 100.4 from 101.3 in May. This decline is primarily due to a fall in the Expectations Index, which decreased to 73.0 from 74.9. The reduction is largely attributed to ongoing concerns about future economic conditions, despite a robust labor market. Consumers are particularly worried about future income and business conditions, contributing to the lower Expectations Index. Additionally, inflationary pressures, particularly on food and groceries, continue to adversely affect consumers’ economic outlook. Given the current situation, expectations for the next release are likely to remain near current levels, with a potential slight increase if inflation eases and the labor market remains strong.

Wednesday, 31 July 2024, 05:00 – BoJ Interest Rate Decision

The Bank of Japan (BoJ) opted to keep its key short-term interest rate steady at 0.10% for June 2024, in line with market expectations. This decision reflects Japan’s current economic conditions, with the BoJ noting moderate recovery alongside some weaknesses. Speculation about a potential rate hike has been growing, with sources suggesting that the decision in the next meeting could be a “close call” and that the central bank might announce a gradual tapering of bond purchases. Despite this, the BoJ have previously indicated its commitment to maintaining policies aimed at combating deflationary pressures, suggesting that accommodative monetary policy will continue in the near term.

Wednesday, 31 July 2024, 20:00 – Fed Interest Rate Decision

At its June 2024 meeting, the Federal Reserve decided to keep the federal funds rate unchanged at 5.50%. This decision was influenced by recent economic data showing moderated inflation, though it is still above the 2% target, and a resilient labor market. There is speculation about a potential rate cut later in the year if economic conditions, such as inflation and employment figures, warrant further easing. However, the Fed is expected to maintain its current rate for now, with futures markets indicating over an 85% probability that rates will stay the same in July, but a likely rate cut by the fall.

Thursday, 1 August 2024, 13:00 – BoE Interest Rate Decision (Aug)

In June 2024, the Bank of England (BoE) decided to keep the interest rate at 5.25% unchanged. This decision was driven by the need to keep inflation on a downward path towards the BoE’s 2% target. Inflation in the UK has recently stabilized around 2%, a sharp decline from the 11.1% peak in October 2022. This stability has led to speculation that the BoE might begin lowering rates soon. However, the Monetary Policy Committee (MPC) remains cautious and wants to ensure inflation is sustainably controlled before making any rate cuts. Thus, the BoE is expected held the rate steady for now with potential rate cut in the coming months if inflation and economic data continue to be favorable.

Friday, 2 August 2024, 14:30 – US Nonfarm Payrolls (Jul)

The latest U.S. Nonfarm Payroll report for June 2024 revealed an increase of 206,000 jobs. This figure, while below the previous month’s 218,000, exceeded the market forecast of 191,000, indicating modest growth. Job gains were particularly notable in government roles, reflecting rises in local and state employment. Healthcare job growth, though still strong, fell short of last year’s average, with notable contributions from ambulatory services and hospitals. Additionally, there were significant gains in social assistance and construction, driven by more employment in family services and construction projects. The upcoming data is anticipated to remain resilient, but factors such as inflation and Federal Reserve rate adjustments could influence future job growth