Asia Summary and Highlights 18 July

Asia Session

USD/JPY slumped in early Tokyo hours by almost a figure. It does not look like an intervention, rather a break of stops accelerated move. The June trade data has come in weaker than estimated, the headline figure is positive on slower import growth. And it would build a difficult case for the BoJ if consumption continue to stay low even when real wage turns positive. USD/JPY is trading 0.13% higher at 156.35 after testing a session low of 155.37 with both the U.S. Treasury and JGB yields higher.

Another strong labor report for Australia in June, employment change came in stronger at 50.2k while unemployment rate ticked up 4.1% but participation rate also rose to 66.9%. This continues to point towards a solid employment market in Australia and reinforces RBA's latest view in pushing back any early easing speculation. AUD/USD is trading 0.11% higher at 0.6737, NZD/USD dropped 0.12% to 0.6075 while USD/CAD slipped 0.03% on stronger oil. Else, EUR/USD is down 0.03% and GBP/USD is unchanged.

North American session

EUR/USD and USD/JPY saw little movement in North America and USD European losses were sustained, the former near 1.0940 and the latter getting close to 156. GBP/USD slipped to near 1.30 from 1.3040 as EUR/GBP erased European losses. EUR/CHF however continued to weaken, to .9665. With equites softer the commodity currencies came under some pressure, CAD in particular with USD/CAD briefly reaching 1.37.

US data was on the firm side of expectations with housing starts and permits both increasing, though the gains were fully due to the volatile multiples sector. A 0.6% rise in industrial production, with manufacturing up by 0.4%, was more convincing. Fed comments from Williams, Waller and Barkin however sustained hopes that easing might start in September and the Fed’s Beige Book was slightly softer than its May release.