Markets’ focus: all eyes on yen and US data today. Here’s why

The Focus is on the Yen and US Macroeconomic Data

Market attention today is on the performance of the yen and US macroeconomic data.
The Japanese currency has been fluctuating in recent weeks, with traders now unwinding bets against yen weakness ahead of crucial US inflation data, which could solidify expectations of a rate cut.

Meanwhile, in the US, economic growth has accelerated more than expected in the second quarter, demonstrating that demand is holding up under the weight of higher borrowing costs.
An accommodative intervention by the central bank is now widely expected, with today’s update of the PCE price index eagerly awaited.

Shifts in the US Markets

In the United States, traders have continued to exit the technology sector, with the S&P500 and Nasdaq Composite in the red overnight, while the Dow Jones Industrial Average increased by 0.2%.
Analysts suggest that a changing of the guard is taking place on Wall Street, with AI stocks that led the rally now driving the decline.
Analysts speak of a “great mini-rotation” in the bullish market.

Where is the Yen Headed?

The yen has dominated currency markets this month, hitting a three-month high on Thursday at 151.945 per dollar, after starting July at a 38-year low of 161.96 per dollar.
Today, Friday, July 26, the Japanese currency reached 153.66, with a weekly growth of 2.5%, the largest gain in 7 days since late April-early May, as global stock sales have driven investors towards safe-haven assets, including the yen.

This significant move follows Tokyo’s presumed interventions in early July, catching traders off guard and leading to the closure of profitable carry trades, where investors borrow yen at low rates to invest in dollar-denominated assets for higher returns.

Focus on US Data

The performance of the US economy and forecasts about the first Fed rate cut continue to interest investors and analysts, influencing global markets.
The dollar has regained stability after yesterday’s data showed a stronger-than-expected US economy, with inflation slowing in the second quarter.

Recent data has highlighted that the global power has maintained resilience despite easing inflation, fueling investor expectations that the US central bank could engineer a soft landing for the economy.

US markets will close the week with monthly PCE data, the last major data point before the Fed meeting next week.
Uncertainty prevails as markets await the new data.