【Week of June 8 onwards】Forex market outlook: CPI, PPI, and ECB in focus; nerves ahead of next week's Bank of Japan and FOMC

This week’s forex market is expected to feature a mix of a “wait-and-see” mood ahead of next week’s BoJ and FOMC, and a sense of caution ahead of key events.

In particular, USD/JPY and EUR/USD will be dominated by:

• US CPI (Consumer Price Index)

• US PPI (Producer Price Index)

• ECB policy rate announcement

• University of Michigan Consumer Sentiment Index

These four will be the major themes.

Focus on USD/JPY

USD/JPY will continue to be in a tug of war between

“US rates”“BoJ rate hike expectations”

Centered around this tug-of-war.

With the BoJ policy meeting coming up next week, markets are also nervous about further BoJ rate hikes and government bond purchases.

Also, when around the ¥150 level,

the risk of FX intervention resurges

and upside chasing is likely to be cautious.

The biggest focus: US CPI

The June 10 (Wednesday) US CPI release is this week’s biggest event.

What the market is watching for is

“Whether the Fed can cut rates within this year.”

This is the key point.

If CPI comes in above expectations

• Reacceleration of inflation concerns

• Diminished expectations for rate cuts

• Rise in US interest rates

• Dollar buying

are likely to occur,

providing a USD/JPY upside impulse.

If CPI comes in below expectations

• Rebound in rate-cut expectations

• Decline in US interest rates

• Dollar selling

are likely,

leading to a pullback in USD/JPY.

PPI cannot be ignored

PPI on the 11th is also important.

Recently, how corporate costs feed into consumer prices is in focus, and

if CPI and PPI move in the same direction, markets may swing significantly.

What about the euro on ECB day?

The ECB policy rate announcement is on the 11th.

If the outcome matches expectations, then attention will shift to

Lagarde’s statements

during the press conference.

If the tone signals caution about future rate cuts,

the euro could rally.

If there are positive comments toward further easing,

the euro could weaken.

Therefore, EUR/USD will likely hinge on the post-announcement press conference.

The Fed moves toward blackout period

With next week’s FOMC,

Fed officials are entering a blackout period and will limit comments on monetary policy.

As a result this week,

economic data are more likely to become direct market drivers

than usual.

Reaction to CPI and PPI could be larger than normal.

Stock and yields trends

Whether US equities stay firm is also important.

• Nasdaq up → risk-on

• Stocks down → risk-off

From this flow, there could be buying of the yen and the dollar.

Also, the 10-year US yield remains highly correlated with USD/JPY;

rising yields tend to push USD/JPY higher,

falling yields tend to push USD/JPY lower.

Watch Trump’s remarks

In periods with scarce market-moving news,

remarks from President Trump can trigger sharp moves.

In particular,

• Tariff policies

• China-related topics

• Criticism of the Fed

• Dollar strength/weakness remarks

require caution.

Oil and gold markets also in focus

The Middle East situation, especially Iran, remains a risk factor.

• Oil price rise → inflation concerns

• Gold buying → risk-off

If this trend develops, it will also impact the currency markets.

As inflation concerns re-emerge, dollar buying can become a driver, so monitoring commodity markets is prudent.

This week's notable schedule

June 9 (Mon)

• Japan GDP revised value

June 10 (Tue)

• Few notable indicators

June 11 (Wed)

⭐ Bank of Canada policy rate announcement
⭐ US CPI
⭐ US 10-year Treasury bond auction

June 12 (Thu)

⭐ ECB policy rate announcement
⭐ ECB President press conference
⭐ US PPI
⭐ Initial jobless claims
⭐ US 30-year Treasury bond auction

June 13 (Fri)

⭐ University of Michigan Consumer Sentiment Index
⭐ Market reaction to SpaceX IPO-related events

This Week in Review

This week is positioned as

“the final confirmation week before next week’s BoJ and FOMC”

to determine the direction.

What will decide the direction are

✅ US CPI
✅ US PPI
✅ ECB meeting

three items.

USD/JPY tends to move with US rates, and EUR/USD hinges on Lagarde’s post-ECB remarks.

Rather than a major trend, this is a market where price ranges emerge around each key event.

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