Euro advances as Eurozone PMIs and Lagarde speeches take focus while Yen stays pressured
EUR/JPY advances toward 185.30 on Monday, gaining 0.16% at the time of writing, as markets prepare for the release of the Eurozone’s preliminary HCOB Purchasing Managers Index (PMI) data and closely watch speeches from the President of the European Central Bank (ECB).
The European economic calendar will take center stage on Tuesday with the first estimates of the June PMIs, which are expected to provide fresh clues about the region’s growth momentum. Investors will also closely monitor comments from ECB President Christine Lagarde on Monday for further guidance on the monetary policy outlook.
On the monetary policy front, ECB policymaker and Governor of the National Bank of Belgium Pierre Wunsch said on Friday that another interest rate hike could come as soon as next month if the central bank sees additional evidence that inflationary pressures are spreading beyond the energy sector. The ECB’s deposit rate currently stands at 2.25%, while financial markets continue to price in at least one additional 25-basis-point increase in the coming months.
In Japan, the Japanese Yen (JPY) remains under pressure despite renewed verbal intervention warnings from Tokyo. Japan’s Finance Minister Satsuki Katayama reiterated on Monday that authorities stand ready to respond to excessive currency market moves at any time, although she declined to comment on specific intervention levels.
The Japanese currency is also being weighed down by concerns over the economic impact of the Middle East conflict and ongoing disruptions to energy supplies through the Strait of Hormuz. Iran announced the closure of the strategic waterway after accusing the United States (US) and Israel of violating the ceasefire, while US President Donald Trump threatened further military action against Iran if Hezbollah continues its attacks on Israel.
These developments are currently overshadowing expectations for further monetary tightening by the Bank of Japan (BoJ). Nevertheless, minutes from the BoJ’s April meeting showed that some board members favored raising interest rates more quickly to prevent inflation from overshooting. BoJ Deputy Governor Shinichi Himino also reiterated that the central bank will continue adjusting rates in line with economic conditions, inflation developments and financial market trends.
Market participants will now focus on Japan’s PMI data due on Tuesday and the release of the Bank of Japan (BoJ) Summary of Opinions from its June meeting on Wednesday, following the 25-basis-point rate increase that lifted the policy rate to 1%, for further insight into the country’s economic outlook.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
The AI boom may follow the path of the 19th-century railway bubble, and builders may not be the ultimate winners
Goldman Sachs analyst Bobby Molavi compared the current situation to the 19th-century British railway mania: 500 companies spent more than the nation's annual income building 8,000 miles of railway, with most early investors losing out, while the real beneficiaries were the later "passengers." He pointed out that the current AI craze is driven by both debt and momentum, and that the S&P 500’s forward P/E ratio of 18x is only "a bit cheaper." Whether the builders can retain value is uncertain, and history does not offer an optimistic answer.
If Anthropic's IPO goes smoothly and the stock price rises next week, then everything remains the same for AI. Otherwise, some companies will go bankrupt.
The shrinking valuations of two major giants have triggered a chain reaction—investors are adopting more conservative revenue multiples for AI startups and are directly halting high-valuation financing for companies with zero revenue. Multiple venture capital firms have advised their portfolio companies to lower valuation expectations and to quickly build up cash reserves. Market participants warn that the outcome of Anthropic’s IPO will be a barometer for the industry: if successful, the boom will continue; if it fails, some companies may face elimination.
After the Brazilian election, political discount deepens; Morgan Stanley remains bullish on Petrobras (PBR.US), focusing on fuel pricing and dividends
Morgan Stanley still maintains its most optimistic "Overweight" rating, but has lowered its year-end 2027 target price from $31 to $25.
Corning (GLW.US) receives initial "Buy" rating from Jefferies! AI factories driving a fiber optic rush, with a potential global supply gap of up to 30%
For Corning, the recent profit growth mainly comes from the expansion of AI clusters. As the number of optical links crossing cabinets and campuses increases, customers need to deploy more optical fibers within limited conduit and cabinet space, thus driving demand for high-density optical cables and connection systems.
Crypto prices
More
