Japanese Yen and Aussie Dollar Forecasts: Israeli Strikes on Iran Trigger Flight to Safety

USD/JPY Slips on Israel Strike – Tertiary Index and Fed Sentiment Up Next

Reports of Israel attacking Iran triggered a flight to safety on Friday, June 13, boosting demand for the Japanese Yen. The USD/JPY pair dropped 0.47% to 142.804 in early trading. Geopolitical developments will remain pivotal in dictating intraday USD/JPY movements amid safe-haven flows.

Japan’s Tertiary Industry Index will also be in focus. Economists expect the Index to rise 0.2% month-on-month in April after falling 0.3% in March.

A higher-than-expected reading would indicate an improving economic outlook, raising market bets on a 2025 Bank of Japan rate hike. On the other hand, an unexpected drop could signal a weakening macro outlook, supporting the BoJ’s more dovish stance.

Given the tertiary sector contributes around 70% to Japan’s economy, the Index has significant policy implications. Index components include retail, hospitality, and financial services.

Other stats include finalized industrial production numbers for April. According to preliminary data, production fell 0.9% month-on-month in April after rising 0.2% in March. Unless there is a significant revision, these will likely play second fiddle to the Tertiary Industry Index.

USD/JPY Daily Outlook: US Consumer Sentiment in Focus

Later in the session, consumer sentiment trends will give insights into spending and inflation trends. Economists forecast the Michigan Consumer Sentiment Index to increase to 53.5 in June, up from 52.2 in May.

A stronger print could signal a pickup in consumer spending, potentially fueling demand-driven inflation. Rising inflation may temper expectations of a 2025 Fed rate cut. A more hawkish Fed stance may drive USD/JPY toward 145. Conversely, a sharp drop in sentiment could rekindle US recession fears and revive Fed rate cut bets. In this scenario, USD/JPY may drop toward 140.

USD/JPY: Key Scenarios to Watch

• Bearish USD/JPY Scenario: Rising geopolitical tensions, higher Tertiary Industry Index, hawkish BoJ cues, or weaker US consumer sentiment could push USD/JPY toward 140.
• Bullish USD/JPY Scenario: Easing geopolitical tensions, lower Tertiary Industry Index, dovish BoJ signals, or pickup in US consumer sentiment may drive the pair toward 145.

See today’s full USD/JPY forecast with chart setups and trade ideas.

AUD/USD in Focus: Geopolitics Impact on Aussie Dollar Demand

Increasing geopolitical tensions pressured AUD/USD early in the June 13 session. Reports of Israel carrying out military strikes on Iran triggered a flight to safety, weighing on the Aussie dollar.

Escalating conflict in the Middle East could spike oil prices, stoke inflation, and heighten global economic uncertainty. Commodity currencies typically come under selling pressure as economic uncertainties develop. WTI Crude soared 6.46% to $71.715 in morning trading.

The AUD/USD pair dropped 0.83% to $0.64785 as news of the strikes broke. An Iranian retaliation could intensify selling pressure, while a de-escalation may support AUD/USD recovery.

AUD/USD: Key Scenarios to Watch

• Bearish AUD/USD Scenario: Rising geopolitical tensions or dovish RBA commentary may drag AUD/USD below $0.6450 toward the 200-day and 50-day EMAs.
• Bullish AUD/USD Scenario: Easing geopolitical tensions or hawkish RBA rhetoric could send AUD/USD above $0.65 toward $0.6550.

Click here for a more comprehensive analysis of AUD/USD trends and trade data insights.

Aussie Dollar Daily Outlook: US Sentiment to Steer Near-Term Action

Later today, the Michigan Consumer Sentiment Survey will affect AUD/USD trends via US-Aussie interest rate differentials.

Rising consumer sentiment could signal a more hawkish Fed stance, widening rate differentials. A wider rate differential in favor of the US dollar may pull AUD/USD below $0.6450, exposing the EMAs. Conversely, a softer consumer sentiment reading may narrow the rate differential, driving AUD/USD above $0.65.

Key Market Drivers to Watch Today:

• USD/JPY: BoJ policy signals and Japan Tertiary Industry Index.
• USD/JPY and AUD/USD: US Michigan Consumer Sentiment and geopolitical risks.
• AUD/USD: RBA policy cues and Beijing’s stimulus plans.

For more in-depth analysis, review today’s USD/JPY and AUD/USD trading setups in our latest reports and consult our economic calendar.