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Yen Gains Traction Following Greek No Vote
USD/JPY notched up a six-week low at 121.86 before recouping to the 122.50 area. The yen posted as investors moved to a safe haven currency in the wake of Sunday’s Greek referendum in which the country voted against further austerity. Against other currencies, though trade has been choppy and much of the early-Asia advance, seen as equity markets reacted negatively to the Greek ‘no’ vote, has subsequently been unwound. The yen has a long standing inverse correlation with stock markets during periods of heightened risk aversion in global financial markets.
The Greek government thinks that it will have a stronger hand at negotiations, but the signals from creditors last week was that a ‘no’ victory would spell an exit from the euro. Germany’s Merkel and France’s Holland are due to meet this evening to discuss the situation, and there is an EU summit and Eurogroup meeting Tuesday.
In Japan, there is a fairly thin calendar is highlighted by June PPI which is scheduled for Friday, and is expected to fall 2.3% y/y after the 2.1% rate of contraction in May. The current account scheduled for Wednesday is expected to improve to a 1,600.0 billion yen surplus in May from 1,326.4 billion in April. May core machinery orders, orders excluding utilities and shipbuilding, scheduled for Thursday, are seen falling 5.0% m/m, largely erasing the 3.8% bounce in April and 2.9% March gain. Consumer confidence is also due on Friday.
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