Highlights July 22, 2022 / 05:16 am UTC

Asia Summary and Highlights 22 Jul

By Cephas Kin Long Yung

Japan headline National CPI 2.4% y/y (expected 2.4%)

National ex Food & Energy 1% y/y (expected 0.9%)

Japan Jibun Markit preliminary manufacturing PMI July 52.2 (prior 52.7)

Australia July flash Manufacturing PMI 55.7 (prior 56.2) & Services 50.4 (prior 52.6)

Asia Session

The Japan CPI data has outweighed the PMI data followed. The headline inflation is now above BoJ's target of 2% but we are not forecasting any changes in BoJ's monetary policy as core inflation is still 1% below, showing there is a lot of unsustainable inflation in the headline data. However, with ex Food & Energy rising to 1%, it is worth keeping an eye on this aspect by year end 2022, when we expect inflation will likely close to peak. If it reached or broke 2%, we maybe hearing words from BoJ. Yet, it is very very far away with Japan's historical inflation structure. USD/JPY is trading higher at 137.83 after touching a session low at 137.03.

The USD is broadly stronger on Friday Asia, as Treasury Yields recover some ground and U.S. major equity indexes marginally in the red. The Australia PMI data is a bit softer than expected, but still in expansionary territory. The data suggest inflationary pressure and rate hike anticipation the major reasons for weaker growth. AUD/USD took the blunt of USD strength and fell to 0.69 figure from 0.6938. So as NZD/USD slipping to 0.6215 from 0.6252. The Loonie performed better as USD/CAD rose to 1.2894 from 1.2866.

Elsewhere, both the Euro and Sterling is down by circa 0.4% against the USD.

North American session

A mixed session with the USD finished net little changed. The EUR initially surged to test the recent highs at 1.0280 after the ECB announced a 50bp rate hike and their TPI plans, but slipped back to pre-announcement levels below 1.02 by the end of the European session. The strongest currency on the session was the JPY, with USD/JPY dipping back below 1.08 as US yields dropped after weaker than expected US data on initial claims and the Philadelphia Fed survey. Claims rose to their highest since January, while the Philly Fed dropped to its lowest since May 2020. 


00:30 GMT - JP: Services PMI (Jul P) 51.2 (Prev: 54)

00:30 GMT - JP: Composite PMI (Jul P) 52.12(Prev: 53)

Data to come

06:00 GMT - UK: Retail Sales (inc Auto Fuel) MoM (Jun) (Mkt: -0.2% Prev: -0.5%)

06:00 GMT - UK: Retail Sales (inc Auto Fuel) YoY (Jun) (Mkt: -5.3% Prev: -4.7%)

06:00 GMT - UK: Retail Sales (ex Auto Fuel) YoY (Jun) (Mkt: 6.2% Prev: -5.7%)

06:00 GMT - UK: Retail Sales (ex Auto Fuel) MoM (Jun) (Mkt: -0.4% Prev: -0.7%)

07:15 GMT - FR: Manufacturing PMI (Jul P) (Mkt: 51 Prev: 51.4)

07:15 GMT - FR: Composite PMI (Jul P) (Mkt: 51.1 Prev: 52.5)

07:15 GMT - FR: Services PMI (Jul P) (Mkt: 52.7 Prev: 53.9)

07:30 GMT - DE: Services PMI (Jul P) (Mkt: 51.4 Prev: 52.4)

07:30 GMT - DE: Composite PMI (Jul P) (Mkt: 50.2 Prev: 51.3)

07:30 GMT - DE: Manufacturing PMI (Jul P) (Mkt: 50.7 Prev: 52)

08:00 GMT - EU: Composite PMI (Jul P (Mkt: 51 Prev: 52)

08:00 GMT - EU: Services PMI (Jul P) (Mkt: 52 Prev: 53)

08:00 GMT - EU: Manufacturing PMI (Jul P) (Mkt: 51 Prev: 52.1)

08:30 GMT - UK: CIPS / Markit Services PMI (Jul P) (Mkt: 53% Prev: 54.3%)

08:30 GMT - UK: CIPS / Markit Manufacturing PMI (Jul P) (Mkt: 52% Prev: 52.8%)

12:30 GMT - CA: Retail Sales (ex Auto) (May) (Mkt: 1.8% Prev: 1.3%)

12:30 GMT - CA: Retail Sales (May) (Mkt: 1.6% Prev: 0.9%)

13:45 GMT - US: Markit Services PMI (Jul P) 4cast: 52 Index (Mkt: 52.7 Prev: 52.7)

13:45 GMT - US: Markit Manufacturing PMI (Jul P) 4cast: 51 Index (Mkt: 52 Prev: 52.7)

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I, Cephas Kin Long Yung, the lead analyst declare that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further declare that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.