Yen at 40-yr lows; ISM PMI and FOMC minutes in focus tonight
As of 2026-07-06 17:00 SGT
Key points
- Tokyo's Nikkei 225 closed virtually flat at 69,738 (−0.01%) while the TOPIX logged a record closing high; AI and chip names pulled back, defense stocks rallied on procurement reports
- USD/JPY climbed to 162.24, extending near 40-year yen lows after Goldman Sachs raised its USD/JPY target to 165 from 155; carry-trade demand remains the dominant narrative
- June US NFP came in at just 57,000 on 3 July, sharply below expectations; tonight's ISM Services PMI (forecast 54.2) at 22:00 SGT and FOMC minutes on 9 July at 02:00 SGT are the week's key risk events
- Hong Kong's Hang Seng surged 1.14% to 23,616 for a third consecutive session gain, led by Tencent (+4%) and Kuaishou (+8%)
- Geopolitical risk elevated: Russia launched its largest barrage on Kyiv this year (at least 12 killed) on the eve of the NATO summit; China conducted a submarine-launched ballistic missile test in the Pacific
Market snapshot
| Instrument | Level | Change |
|---|---|---|
| USD/JPY | 162.24 | +0.56% |
| EUR/USD | 1.1423 | -0.15% |
| Nikkei 225 (close) | 69,738 | -0.01% |
| Hang Seng (close) | 23,616 | +1.14% |
| Dow futures | 53,242 | +0.11% |
| S&P 500 futures | 7,561.00 | +0.44% |
| Nasdaq 100 futures | 29,844 | +0.97% |
| Gold futures | 4,160.00 | +0.83% |
| WTI crude | 68.45 | -0.35% |
| Bitcoin | 62,829 | -1.20% |
| US 10-yr yield | 4.485% | +0.0bp |
Foreign exchange — Dollar firms broadly as yen extends multi-decade slide
USD/JPY climbed to 162.24 during Tokyo hours, clearing the prior session's high of 161.49, as the dollar strengthened across G10 currencies on the first full trading day after the Independence Day holiday. Goldman Sachs revised its USD/JPY target to 165 (from 155), citing widening US–Japan rate differentials and the Bank of Japan's measured tightening pace. EUR/USD eased to 1.1423 (−0.15%). Japanese authorities' repeated warnings about excessive yen weakness cap USD/JPY upside — actual yen-purchase intervention has not materialised but the threat remains live. Depending on tonight's ISM Services PMI and the direction of the dollar, USD/JPY may probe the 163 handle after the NY open if data surprises to the upside.
Equities — TOPIX record close; chip names soften, defense stocks rally
The Nikkei 225 ended fractionally lower at 69,738 while the TOPIX logged a record closing high, as a rotation away from AI chip plays (Kioxia faced profit-taking) lifted defense names (Mitsubishi Heavy, IHI, Kawasaki Heavy) on procurement reports. The Hang Seng extended its rally to 23,616 (+1.14%) for a third straight session gain, driven by Tencent (+4%) and Kuaishou (+8%). European markets opened higher; US equity futures point to a constructive open — Dow futures 53,242 (+0.11%), S&P 500 futures 7,561 (+0.44%), Nasdaq 100 futures 29,844 (+0.97%). Samsung's preliminary Q2 results, due 7 July, are the next semiconductor catalyst; a strong print could revive the AI-chip narrative and set the tone for tomorrow's Tokyo open.
Macro — Soft NFP sets up ISM as the week's first key data point
June non-farm payrolls came in at 57,000, well below consensus when reported on 3 July, significantly reducing near-term Fed rate-hike pricing. Tonight's ISM Services PMI (forecast 54.2) is the first test of whether that dovish repricing holds. The FOMC meeting minutes (9 July, 02:00 SGT) are the week's highest-stakes event; Fed Chair Warsh has declined to offer forward guidance, making the minutes the primary window into current Fed thinking. In Japan, the 10-year JGB yield briefly touched 2.83%, its highest in approximately 29 years, driven by fiscal expansion concerns under Prime Minister Takaichi. Eurozone May PPI rose to 5.9% year-on-year (prior: 4.9%), and the Sentix investor confidence index rebounded to −3.1 from −13.4, signalling fading recession fears. A beat on tonight's ISM Services print would revive year-end Fed hike pricing and drive dollar gains through the NY session; a miss would extend the post-NFP dovish repricing.
Commodities — Gold holds near two-week highs; WTI pressured by fifth OPEC+ output hike
Gold futures held at $4,160 (+0.83%), supported by the post-NFP softening in rate-hike expectations and by sustained geopolitical risk across multiple fronts. The prior session's range was $4,062–$4,140.10; gold has extended above that range on renewed safe-haven interest. WTI crude eased to $68.45 (−0.35%) following OPEC+'s fifth consecutive output increase, which weighed on sentiment as the market digests rising supply. Hormuz tanker flows have improved following UK, French, and Omani cooperation on passage safety, reducing the near-term geopolitical premium. LME copper inventory fell 3,950 tonnes to 314,950 tonnes, and aluminium stock declined 3,225 tonnes, indicating underlying industrial demand remains intact. Tonight's ISM result and the ensuing dollar trajectory will be the primary determinant of whether gold challenges the $4,200 level into the NY open.
Geopolitics — Russia's Kyiv barrage, China's missile test and Iran's state funeral
On the eve of the NATO summit in Ankara (7–8 July), Russia launched its largest missile barrage on Kyiv this year, killing at least 12 people. China announced the PLA Navy fired a submarine-launched ballistic missile into the Pacific, which "landed in the predetermined zone"; Japan's Chief Cabinet Secretary confirmed it did not pass through Japanese airspace or its EEZ. In Iran, state funeral proceedings for Supreme Leader Khamenei — killed in a US–Israeli attack earlier this year — entered their third day; his designated successor Mojtaba Khamenei was reportedly not present, raising questions about Iran's political transition. Hormuz tensions have eased but not fully resolved. Russia–Ukraine escalation, China's missile assertion and Iran's succession uncertainty are likely to keep risk appetite cautious into the NY open and through tomorrow's Tokyo session.
Upcoming events
| Time (SGT) | Region | Event | Impact |
|---|---|---|---|
| 07/06 22:00 | US | ISM Services PMI (forecast 54.2) | High |
| 07/08 10:00 | NZ | Official Cash Rate (forecast 2.50%) | High |
| 07/08 10:00 | NZ | RBNZ Rate Statement | High |
| 07/08 11:00 | NZ | RBNZ Press Conference | High |
| 07/09 02:00 | US | FOMC Meeting Minutes | High |
| 07/10 20:30 | CA | Employment Change (forecast 10.0K) | High |