Asia Summary and Highlights 4 September

Asia Session

The USD/JPY has followed the overnight momentum and see more JPY bids in early Asia. Bloomberg reported Japan’s state pension fund may step up domestic purchases which would likely be supportive for Japanese asset and JPY. As session prgress, USD/JPY takes a breather with earlier losses partially retraced as JGB yields slide. U.S. Treasury yields are also lower across the curve but to a smaller magnitude. Equities are in a sea of red with Nikkei down almost 4% and TOPIX by 3%. USD/JPY is trading 0.18% lower at 145.22.

Previewed by Tuesday's preliminary trade data, the Q2 Australian GDP has come in lower than expected at 0.2% q/q. Household consumption remains a laggard as Australians' are being restricted the low real wage.  AUD/USD is down 0.12% at 0.6703 after reaching a session low of 0.6685, NZD/USD is down 0.04% at 0.6184 while USD/CAD slipped 0.11%. Else, EUR/USD is up 0.13% and GBP/USD is up 0.03%.

North American session

The USD saw some early losses as UST yields fell led by a plunge in oil prices due to hopes for an end to supply disruptions in Libya, but the USD losses were subsequently reversed. EUR/USD and USD/JPY were little changed near 1.1040 and 145.60 respectively. GBP/USD came under some pressure, seeing lows below 1.31. AUD/USD was also soft, falling to .6710.

US data had little impact. August’s ISM manufacturing index at 47.2 was up from 46.8 in July but still weak, with the new orders and production indices slipping. July construction spending fell by 0.3% but was slightly firmer net of revisions.