Asia Summary and Highlights 7 August
BoJ's Uchida says won't raise rates if market unstable
Asia Session
The latest volatility in the Japanese equity space and JPY seems to have brought out the ultimate verbal intervention from BoJ. Uchida says won't raise rates if market unstable. While it does not mean a shift in policy stance, it is good enough to reassure market participants. USD/JPY shot higher to 147.71 up 2.38% for the day as JGB yields drop while U.S. Treasury yields continue to recover across the curve.
Nikkei continue to recover and has already recovered Monday's loss, so as TOPIX. Risk sentiment is broadly positive with U.S. three major equity indexes up more than a percent, regional equities are also in the green and seems to be boosting the Antipodeans. The Q2 employment data has come in hotter for NZ. The Q2 unemployment rate is 4.6% vs. 4.7% expected with participation rate also rose to 71.7% from 71.3%. Wage increased faster than expected on y/y and outperforms on q/q. It pushes back market expectations of a early cut from the RBNZ in the coming meeting and supported the Kiwi. NZD/USD is trading 0.97% higher at 0.6011, AUD/USD also 0.55% higher at 0.6553 while USD/CAD slipped 0.09% with oil up near half a dollar. Else, EUR/USD is down 0.14% and GBP/USD up 0.14%.
North American session
Equities saw a significant bounce which lifted the commodity currencies, AUD/USD to .6530 from .6470 while USD/CAD fell to 1.3770 from 1.3840. USD/JY rose to near 145 from near 144. EUR/USD saw only modest gains to 1.0930 after finding support above 1.09. Neither EUR/GBP nor EUR/CHF saw much movement in North America, though the former sustained European gains and the latter sustained European losses.
There was not much in the way of data. June’s US trade deficit narrowed to $73.1bn from $75.0bn but was slightly wider than expected. Canada recorded an unexpected June trade surplus of C$0.64bn, versus a C$1.61bn deficit in May. Kamala Harris chose Minnesota Governor Tim Walz as her running mate, who is seen as a little to the left than most of the names on her shortlist.