Asia Summary and Highlights 26 July

Asia Session

While it is a "relatively" steady Asia session this week, USD/JPY still have a range of almost 80 pips volatility in early Asia. Tokyo July Headline CPI came in at 2.2% y/y, ex fresh food 2.2% and ex fresh food & energy 1.5%. It continues to be hovering around BoJ's 2% target and the lack of heat may erode support for BoJ's further tightening. It aligns with our central forecast of BoJ's taking one step at a time in the meeting next week, only reduce bond purchase but no rate changes. USD/JPY is trading 0.09% lower at 153.76 with both U.S. Treasury and JGB yields little changed.

Global risk sentiment is steadier with minor relieve for U.S. three major equity indexes and Nikkei, Chinese and Hong Kong equity indexes are in in the red. USD is broadly lower. The Aussie capitalized on that and see AUD/USD up 0.24% to 0.6553, NZD/USD gained less and is up 2 pips while USD/CAD slipped 0.09% as oil also up a few cents. Else, EUR/USD up 0.11% and GBP/USD up 0.1%.

North American session

Q2 US GDP came in stronger than expected at 2.8% with core PCE prices on the firm side of expectations at 2.9%. June durable goods orders did plunge by 6.6% on aircraft but the ex-transport gain of 0.5% was on the firm side of trend, while initial claims slipped by 10k to 235k. The data gave a boost to the USD, most notably USD/JPY, which bounced from near 152.70 to see highs above 154. 

Elsewhere however the USD gains were modest and brief.  Commodity currencies outperformed with AUD/USD rising to .6550 from .6525 and USD/CAD slipping to 1.3815 from 1.3845, though equity gains faded in the afternoon. EUR/USD kept to a tight range centered on 1.0850 but outperformed GBP, with EUR/GBP advancing to near .8440.