2022-06-27 08:00:00

Daily Markets View

Daily Technical & Fundamental View

Almost ten years ago,  Shinzo Abe delivered his ‘Three Arrows’ prescription for a stagnant Japanese economy: expansionary monetary policy, fiscal stimulus, and structural reform. Overseas investors purchased some JPY25 trillion by the end of 2015 , signalling widespread approval for Abe’s economic vision.

A decade later, the passion for Abenomics has long since passed. Although foreign investment is marginally positive on a net basis, the majority of overseas money had left the Japanese stock market . A decade of expansionary monetary policy has also resulted in a historically cheap yen, which is at its lowest levels on a trade weighted basis since the collapse of the Bretton Woods . By financial measures at least Abenomics boom is over. Message :Japan - policy laboratory of the world -  MMT does not work.

It is  but obvious that it would be difficult to quell  inflation because governments and central banks keep elevated levels of deficit and monetization

S&P 500 is down around 18% year-to-date, on track for its worst first half of any year since 1970. Re-balance positions for term-end- prudent not to read too much into the bear market rally.UoM  cons sentiment fell to a record low, the inflation expectations component eased slightly and was taken as a net positive for the equity market.

Hopes inflation may be peaking will get  tested by PCE price index this week..Other U.S. data  includes consumer confidence, final Q1 GDP, durable goods, Chicago PMI & ISM mfg besides  Pending home sales & Case Shiller home prices. USD index 103.80 104.20 consolidation.

Focus on Sintra ECB Forum. This week`s data : German CPI, EZ cons confidence, flash June HICP, final mfg PMIs, unemp  & sentiment indices .The gas stand-off with Russia isn’t easing up, ramping up the possibility of rationing in winter -struggles to refill reserves. 1.0535 1.0585

The past two years have arguably been the most economically challenging in China’s recent history. Despite this, investors who focus on the most important metric – earnings revisions – may find pockets of opportunity. This week China PMI surveys for June  hold relevance.China May industrial profits -6.5% y/y .China net injects CNY 90bln in 7-day reverse repo.
USDCNY 6.6894 close to confirm upside.

This week`s UK  data includes :  Q1 GDP, current account and final June mfg PMI .
There are plenty of reasons to worry about pound.The next target for GBP/USD drop evolving is 1.1778.Ultimate target is parity.

Japan has a busy week with  Q2 Tankan survey, IP, retail sales, unemployment and Tokyo CPI.Two of the three mega-banks noted selling USDJPY aggressively as they seem to find BoJ tone seems tad different in June minutes` concern over sharp fall.
134.25 134.75

Macros in focus as twin deficits haunt.
Rupee`s trajectory depends on  how quickly  shape of economic recovery will change for the better- policy makers still consider this cyclical ..Fx reserves ext fall to $590 bln as at June 17. Add unwinding of forward positions and last week `s intervention . Tenability vs Tenacity . 78.15 78.35