Asia Summary and Highlights 2 Sep

Asia Session

The Japan Q2 business CAPEX came in at +7.4% y/y. It is shorter than expected but still show growth from Q1. USD/JPY has reversed earlier gains as market sentiment turn sour. Regional equities and U.S. three major equity indexes are all in the red with HSI leading the fall and U.S. indexes pips in the red.  USD/JPY is now trading 0.02% lower at 146.1 after touching session high of 146.59 with JGB yields higher.

The ANZ Job Ads for Australia contracted in August, continues to point towards a healthy but tilting soft labor market. With regional sentiment mostly negative, the antipodeans are lower against USD. AUD/USD is down 0.02% at 0.6764 and NZD/USD is down 0.23% to 0.6235 while USD/CAD rose 0.11% as oil slips more than half a dollar. EUR/USD and GBP/USD are unchanged.

North American session

US July core PCE prices were as expected with a 0.2% increase, and subdued at 0.16% before rounding. Personal spending was also as expected with a 0.5% rise but personal income exceeded expectations with a rise of 0.3%, though still below that of spending. The USD advanced on the data which was seen as leaving little justification for a 50bps September easing. The initial USD bounce was partially corrected later in the morning, but the USD saw renewed gains in the afternoon, responding to higher UST yields.

USD/JPY moved above 146 from around 145.30 while EUR/USD fell to 1.1050 from 1.1085. EUR/GBP more than fully reversed European losses. AUD/USD fell to .6765 from .68 with AUD/CAD weaker after Q2 Canadian GDP exceeded expectations with a 2.1% annualized gain. However details showed the data less impressive outside strength in government and a brief dip in USD/CAD was not sustained. USD/CAD saw only marginal gains from around 1.3475 before the data, with two moves above 1.35 failing to hold.