Key Highlights:
- USD/JPY slips to 142.80 amid geopolitical jitters after Israeli airstrikes on Iran.
- AUD/USD retreats below 0.6480, pressured by Middle East tensions and rising oil prices.
- Upcoming data from Japan’s Tertiary Industry Index and US Consumer Sentiment to guide market moves.
Japanese Yen Climbs as Investors Seek Safety Amid Middle East Escalation
The Japanese Yen strengthened sharply on Friday, June 13, as investors rushed to safe-haven assets following reports that Israel launched strikes on Iranian nuclear and military targets. As risk aversion intensified, USD/JPY dropped 0.47%, reaching 142.804 in early Asian trading.
Markets now turn their attention to Japan’s Tertiary Industry Index, a key barometer of the services sector, which makes up nearly 70% of Japan’s economy. A stronger-than-expected rise could boost confidence in Japan’s economic recovery and support hawkish expectations for the Bank of Japan (BoJ). Conversely, a weaker reading may reinforce the central bank’s cautious stance.
Additionally, finalized industrial production figures are due. Unless significantly revised, these are expected to have limited impact compared to the Tertiary Index.
USD/JPY Outlook: US Consumer Sentiment to Influence Fed Policy Bets
Later in the day, the spotlight shifts to the University of Michigan Consumer Sentiment Index. A reading above the forecast of 53.5 could suggest improving household confidence and potentially reduce expectations for a Fed rate cut in 2025. This scenario may push USD/JPY toward 145.00.
However, if sentiment weakens sharply, it may reignite recession concerns and dovish Fed bets, likely sending USD/JPY below 140.00.
📉 Key Bearish Scenario: Rising geopolitical tensions, stronger Japanese data, and weak US sentiment could drive USD/JPY down to 140.
📈 Key Bullish Scenario: Calming tensions and stronger US data may propel USD/JPY toward 145.
Aussie Dollar Slumps on Middle East Fears and Spiking Oil Prices
The Australian Dollar (AUD) fell sharply on Friday amid heightened global uncertainty. The AUD/USD pair dropped 0.83% to 0.6478 following reports of Israeli military action in Iran.
As investors flocked to safety, commodity-linked currencies like the Aussie suffered. Additionally, WTI crude oil surged 6.46% to $71.71, raising fears of supply shocks and inflation. These conditions weigh heavily on risk sentiment and pressure the AUD.
🔻 Bearish AUD/USD Outlook: Rising conflict and dovish Reserve Bank of Australia (RBA) signals could push AUD/USD below 0.6450, eyeing the 200-day and 50-day EMAs.
🔺 Bullish AUD/USD Outlook: De-escalation of tensions and hawkish RBA rhetoric could support a rally toward 0.6550.
AUD/USD Near-Term Direction Tied to US Data and Sentiment
Beyond geopolitics, AUD/USD traders will watch the US Michigan Consumer Sentiment Survey closely. A stronger reading could lift the US Dollar via rate hike bets, further weakening the Aussie. On the other hand, a soft print could narrow interest rate differentials, supporting a rebound in AUD/USD.
📌 Today’s Key Drivers:
- USD/JPY: Japan’s Tertiary Industry Index and BoJ policy expectations.
- USD/JPY & AUD/USD: US consumer sentiment and global geopolitical risk.
- AUD/USD: RBA guidance and stimulus actions from China.
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