Foreign exchange market. Asian session: Friday’s weaker-than-expected U.S. economic data and escalating violence in Iraq weighed on markets

Economic calendar (GMT0):

03:20    Australia   RBA Assist Gov Kent Speaks                                                   

05:00    Japan       BoJ monthly economic report  June

The U.S. dollar traded mixed against the most major currencies. Friday’s weaker-than-expected U.S. economic data and escalating violence in Iraq weighed on markets. The U.S. producer price index decreased 0.2% in May, missing expectations for a 0.1% increase, after a 0.6 rise in April.  The U.S. producer price index excluding food and energy declined 0.1% in May, missing expectation for a 0.2% rise, after a 0.5% gain in April.

Reuters/Michigan consumer sentiment index for the U.S. fell to 81.2 in June from 81.9 in May, missing expectations for a rise to 83.2.

The violence in Iraq could lead to disruptions in the oil supplies in OPEC’s second-biggest oil producer. U.S. president Barack Obama warned to use air strikes to help the government in Baghdad.

The New Zealand dollar traded higher against the U.S dollar due to the Friday’s weaker economic data from U.S. The Westpac index of consumer sentiment for Q2 declined to 121.2 from 121.7 the previous quarter.

The Australian dollar traded higher against the U.S. dollar in the absence of any economic reports in Australia.

The Reserve Bank of Australia Assistant Governor Christopher Kent said today that the unemployment rate in Australia will remain elevated for the next two years. He added moderate wage growth and better productivity should help the economy. Mr. Kent also pointed out “a decline in the real exchange rate is one important way in which the economy can adjust to the decline in the terms of trade”.

The Japanese yen increased against the U.S. dollar due to the increasing demand for safe-haven currency. The increasing demand for safe-haven currency was driven by escalating violence in Iraq. No economic reports were released in Japan.

The Bank of Japan (BoJ) released its monthly economic report. The BoJ said Japan's economy has continued to recover moderately as a trend, but there is a decline in demand following caused by the consumption tax hike. 

EUR/USD: the currency pair traded mixed

GBP/USD: the currency pair traded mixed

USD/JPY: the currency pair declined to Y101.75

The most important news that are expected (GMT0):

09:00    Eurozone     Harmonized CPI                                              May       +0.2%  -0.1%   

09:00    Eurozone     Harmonized CPI, Y/Y (Finally)                         May       +0.5%  +0.5%  

09:00    Eurozone     Harmonized CPI ex EFAT, Y/Y                        May       +0.7%  +0.7%  

12:30    Canada        Foreign Securities Purchases                       April      -1.23     4.27      

12:30    U.S.             NY Fed Empire State manufacturing index     June      19.0      15.2      

13:00    U.S.             Net Long-term TIC Flows                                April      4.0         41.3      

13:00    U.S.             Total Net TIC Flows                                         April      -126.1                 

13:15    U.S.             Industrial Production (MoM)                            May       -0.6%   +0.6%  

13:15    U.S.             Capacity Utilization                                          May       78.6%   78.9%   

14:00    U.S.             NAHB Housing Market Index                            June      45          47