The Japanese Yen may continue to push higher on the back of safe-haven demand as geopolitical jitters continue to drive risk aversion across financial markets.
Talking Points:
Yen May Continue Higher as Geopolitics Drive Risk Aversion
Canadian Dollar Advanced Before June CPI Data Overnight
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The economic calendar is quiet in European hours, with May’s Eurozone Current Account figures the only noteworthy item on the docket. Volatility may be on tap all the same however as geopolitical jitters rattle financial markets. The spotlight is on the Ukraine, where the aftermath of a Malaysian Airlines plane crash continues to play out amid debate about who is responsible for shooting down the civilian craft. Traders are also keeping an eye on the Middle East, where Israel has launched a ground offensive in Gaza.
Both flare-ups remain in flux, opening the door an unexpected headline to jolt investors and send markets scrambling. European and US stock index futures are pointing lower in late overnight trade, hinting the path of least resistance favors risk aversion. In the G10 FX space that means the safety-linked Japanese Yen may continue to strengthen after yesterday’s impressive rally.
The Canadian Dollar outperformed in overnight trade, rising as much as 0.2 percent on average against its leading counterparts. The move seems to have reflected pre-positioning ahead of the upcoming release of June’s CPI data set. The benchmark year-on-year inflation rate is expected to print at 2.3 percent, unchanged from the prior month.
However, data from Citigroup suggests Canadian price-growth data has tended to outperform relative to consensus forecasts since February, opening the door for an upside surprise. Such an outcome may boost the BOC policy outlook, offering support to the Loonie as USDCAD tests a key technical resistance level.
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