Asia Summary and Highlights 28 August

Asia Session

On Friday, BoJ has another welcoming data as the Tokyp CPI has come in stronger. August headline CPI arrived at 2.6% y/y from 2.2%, ex fresh food at 2.4% from 2.2% and ex fresh food & energy at 1.6% from 1.1%. It is a welcoming sign for the hawkish BoJ but we will need to see sustained change in consumer and business behavior to confirm trend inflation will be higher. USD/JPY is trading 0.09% lower at 144.85 as JGB yields outperform their U.S. counterpart.

Regional equities are broadly positive with HSI leading close to a 2% gain for Friday's Asia session. U.S. three equity indexes are performing individually but with little range. The Australia Retail sales for July came in at 0.0% y/y and continue to points to soft domestic consumption sentiment. AUD/USD is trading 0.02% higher at 0.6807, NZD/USD is also up 0.04% at 0.6265, supported by positive regional sentiment while USD/CAD rose 0.02%. Else, EUR/USD is down 0.04% and GBP/USD is down 0.05%.

North American session

The USD bounced on an upward revision to Q2 US GDP to 3.0% from 2.8%, but most of the gains were erased by the close. USD/JPY saw the strongest bounce, peaking at 145.55 from around 144.65 before the data, before slipping back to around 144.85. EUR/USD slipped to 1.1075 from near 1.11 before the data, after bottoming at 1.1056. EUR/GBP saw little change but EUR/CHF rose to .9380 from .9360, after a peak at .94. AUD/USD saw marginal slippage to near .68 while USD/CAD edged up to 1.3485 with a fading of equity gains weighing on the commodity currencies.

The upward revision to GDP was more than fully explained by consumer spending, which was revised up to 2.9% from 2.3%, with most other components revised down, as was the core PCE price index, to 2.8% from 2.9%. July’s advance goods trade deficit increased to $102.7bn frim $96.6bn while initial claims were little changed at 231k from 233k. Later July pending home sales saw a sharp 5.5% decline.