@Japanese yen seems to us data, Summit of the leaders of the EU Directorate

 23 June 2012 01: 57 GMT   Fundamental Forecast for Japanese Yen: Mixed
The Japanese Yen sits at the cross-currents of major themes driving financial markets in the week ahead. The currency's benchmark pairing against the US Dollar continues to show a strong correlation with 10-year US Treasury yields (on 20 - day percent change studies). Meanwhile, the crosses continue to track closely with risk sentiment trends, as tracked by the MSCI World Stock Index. This exposed the Japanese unit to the evolving threat of structural instability posed by the lingering Eurozone debt crisis as well as strengthening headwinds facing global economic performance.
On the growth front, the focus remains on the United States. The Eurozone is widely expected to have entered recession at this point, and leading economic data certainly seems to support that view. That has translated into a slowdown in Asia, which depends on Western Europe for a large chunk of export demand. That pine investors' hopes on the US and the ability of a fragile and uneven recovery to offset the malaise elsewhere. This puts the spotlight on the June set of survey data as the timeliest gauge of activity in the world's top economy.
Manufacturing activity surveys from the Dallas, Richmond and Kansas City Fed branches are due to cross the wires next week, with mixed results expected. The Chicago PMI and Consumer Confidence readings are also on tap. With the Fed opting not to re-launch quantitative easing at last week's FOMC meeting, soft outcomes threaten to spark risk aversion and send Yen crosses lower along with stock prices. USDJPY is likewise vulnerable in the event that haven demand using Treasury bond prices and yields, but fading QE3 hopes and sinks a parallel pickup in safety-seeking flows into the US Dollar are likely to see the hand relatively better insulated from Yen strength than elsewhere.
Feeling can likewise falter if Eurozone officials' efforts to rein in the debt crisis and boost growth once again disappoint financial markets. Event risk heats up toward the end of the week you have had leaders hold a two day summit while the German Parliament holds a vote on the tax compact treaty. Global leaders put heavy pressure on their European counterparts to step things up at last week's G20 sit-down. With that in mind, traders will look for operational details of new policies to emerge from the summit. Possible initiatives include a banking union based on a region-wide deposit insurance scheme. Details of a €125 billion growth-boosting effort announced after German, Italian French and Spanish heads of state met in Rome on Friday will also be sought.