EUROPEAN INFLATION: EZ HICP Sees Core Goods Above Highest Estimate

Reuters reports comments from an unnamed senior Iranian official, claiming "Indirect negotiations with the US that started on Tuesday night in Doha continue," adding "Indirect negotiations with the US in Doha are focused on the release of Tehran's funds and the Strait of Hormuz". 

• The Qatari Foreign Ministry noted on 29 June, ahead of the talks, that “The issue of the frozen funds is linked to the progress of negotiations between Washington and Tehran,” the ministry said, adding that any transfer would require agreement by both parties." Iran's ISNA reported that President Masoud Pezeshkian has claimed that “Based on the plans made, USD6 billion out of a total of USD12 billion of Iran’s funds in Qatar should be released and returned to the country.”
• Both the US and Iran have talked up their negotiating positions going into the technical talks, but there appears to be little sign of headway being made. Indeed, on the Strait, the US continues to claim the route is open, while Iran demands both payments for transit and the use of only its approved corridors. It is also unclear if or how a de-mining effort will take place, with Iran and the US both claiming they will carry it out, while France has offered its assistance (roundly rejected by Iran). 

• After month/quarter end dynamics took the USD index back to 101.05 yesterday, the DXY has been steadily recovering since. While we remain around 40 pips off the recent highs, the bullish trend for the greenback remains firmly intact as we approach comments from Fed Chair Warsh later today, speaking at the ECB’s Forum in Sintra.
• Multiple factors contributed to USDJPY’s extension higher on Tuesday, with the pair then reaching a new high of 162.84 overnight. Primarily, the break above 161.95 and 162.00 took away the notion of any line in the sand for the MoF, then allowing higher core yields, an aggressive steepening of the JGB curve and firmer equities to provide additional bullish impetus. Scope is seen for an extension towards 163.61, the top of a bull channel drawn from Feb 12 low.
• Japan’s top FX official Mimura did not mention the threat of future intervention in his Bloomberg interview. Instead, he used the opportunity to counter the view that the intervention by the MoF in April/May was a failure.
• The general dollar bid and softer equities have weighed on AUD Wednesday, which after a strong bounce yesterday has returned sub-0.6900. Price has traded through a key support marked by the base of a bull channel drawn from Apr ‘25 low - currently at 0.6915. A clear channel breakout would strengthen the bear theme and highlight a stronger reversal. This would open 0.6833, the Mar 30 low and a key support.
• US ADP and ISM Manufacturing PMI highlight the data calendar alongside the busy schedule for central bank speakers. US June employment figures cross on Thursday.