Europe Summary and Highlights 15 August

Europe session 

Subdued summer trading in Europe, with not much movement in spot rates.  Next focus is the U.S. retail sales data.  However, traders are also looking ahead to Fed Powell comments at Jackson Hole at the end of next week to see whether the Fed chair is leaning towards 25bps or 50bps for the September FOMC meeting.  

USD/JPY remains a focus also, with a short-term consolidation band seen to be 146-148.  A break either side is seen leading to renewed JPY volatility – either further JPY correction or renewed JPY gains.  NOK did see a small rally after the Norges bank kept policy unchanged and noted concerns about the weak NOK.    

Asia Session

The July Australian labor data has come in stronger than expected. Headline employment change continue to be grow at +58.2k with full time employment grew +60.5k. While unemployment rate y/y edged up to 4.2% from 4.1%, it came along the higher participation rate y/y of 67.1% from 66.9%. With such hot labor report, RBA may reassess its current forecast of wage growth and reinforces their push back of easing. AUD/USD is trading 0.47% higher at 0.6626 after touching a session low of 0.6564, NZD/USD shook off early weakness to trade 0.07% higher at 0.6002 while USD/CAD is unchanged.

The Q2 Japan GDP has returned to expansion after two dismay quarters, led by a rebound in private consumption and capital expenditure. It would be welcoming for the BoJ as they are tilting towards a hawkish side in terms of forward guidance and policy step. USD/JPY is trading unchanged with JGB outperforming U.S. Treasury in yields. Else, EUR/USD is down 0.02% and GBP/USD is up 0.11%.