FXTRADING Economic Data Summary (Asia-Pacific | 06/29)

Eurozone Consumers See Inflation Expectations Cool

The European Central Banks latest Consumer Expectations Survey showed that Eurozone households have become less concerned about future inflation. One-year inflation expectations fell from 4.0% to 3.5% in May, while three-year and five-year inflation expectations remained unchanged at 2.9% and 2.4%, respectively, suggesting that short-term price pressures are easing while long-term inflation expectations remain well anchored. Meanwhile, consumers expect the economy to contract by 1.7% over the next 12 months, compared with the previous expectation of a 2.2% decline, while income growth expectations edged up from 0.8% to 1.0%. However, concerns about the labor market remain elevated, with unemployment worries showing little improvement.

Falling energy prices and easing external risks have been the key drivers behind improving consumer sentiment. Although economic expectations have strengthened somewhat, consumer spending and labor market conditions still lack sufficient momentum, indicating that the Eurozone's economic recovery is likely to remain gradual. FXTRADING Analysis: The decline in short-term inflation expectations suggests that previous price shocks have not become entrenched in long-term inflation expectations, while household confidence is gradually improving.

Tokyo Inflation Continues to Accelerate

Tokyo's inflation continued to strengthen in June, with all major price indicators improving from the previous month. Core CPI, excluding fresh food, rose 1.6% year-on-year, headline CPI increased to 1.7%, while core-core CPI, which excludes both fresh food and energy, climbed further to 1.9%. Although core inflation remains below the Bank of Japan's target, underlying price pressures continue to build, and the inflation structure has become healthier than before.

Looking at the components, rice prices eased as supply recovered, but prices for pork, tuna, and several processed food products continued to rise at a relatively fast pace. Service prices also remained on an upward trend, indicating that cost pressures are gradually spreading across a broader range of consumer sectors. FXTRADING Analysis: Japan's inflation is gradually shifting from being energy-driven to being supported by broader domestic demand, strengthening the foundation for sustained price growth. If service inflation and wage growth continue at the current pace, the Bank of Japan is likely to continue advancing its monetary policy normalization.

US Labor Market Remains Resilient

The latest US employment data showed that the labor market remains broadly resilient. Initial jobless claims fell to 215,000 in the week ending June 20, coming in below market expectations, while the four-week moving average remained at a relatively low level, indicating that layoffs have not increased significantly and that the labor market continues to demonstrate solid resilience.

However, continuing jobless claims continued to rise, suggesting that unemployed workers are taking longer to find new jobs as hiring demand has softened compared with earlier periods. The US labor market is currently characterized by limited layoffs and slower hiring, indicating a gradual return to a more balanced state rather than a sharp deterioration. FXTRADING Analysis: The labor market continues to serve as a key pillar supporting the US economy. Although hiring has slowed, layoffs remain limited. As long as employment conditions stay stable, the Federal Reserve will likely have room to continue monitoring inflation developments before determining its next policy move.

German Business Climate Continues to Improve

Germany's Ifo Business Climate Index improved again in June, with companies expressing greater confidence in current business conditions than in the previous month, although optimism about the future remained relatively restrained. As geopolitical uncertainties eased, business sentiment improved from earlier lows, with manufacturing, trade, and construction all showing signs of recovery. Nevertheless, overall demand remains weak.

Across sectors, manufacturers became more optimistic about future prospects, although new orders continue to recover only gradually. Service providers expressed greater confidence in current business conditions but remained cautious about the outlook. FXTRADING Analysis: Business confidence in Germany is steadily improving, suggesting that the worst phase of the downturn may be over. However, both domestic and external demand remain insufficient to provide sustained support, and the pace of recovery will continue to depend on improvements in the broader European economy and corporate order books.