Summer Slows Down: Markets Stay Focused on Yen Intervention, Iran Deal, and US Inflation

As the summer months approach, financial markets show no signs of slowing down. Policymakers in Japan are facing a nightmare scenario as the yen continues to languish at four-decade lows, making fuel imports more expensive during an energy shock.

The US Treasury Secretary's 'to-do' list, featuring purchases of yen, has sparked renewed interest from FX traders. However, the use of euros rather than dollars in the US intervention has raised questions over the resilience of the dollar's reserve-currency status.

Investors are holding onto hopes for a deal to end the Gulf conflict and ensure safe passage through the Strait of Hormuz. Negotiations between Iran and Oman have picked up pace, but expectations that any agreement will hold remain modest given the 24th week of conflict.

In the US, inflation data due on Wednesday is expected to show a 3.4% year-on-year rise in consumer prices, with core CPI forecast to increase 2.5%. Producer price data and retail sales figures will also provide key insights into the economy's performance.