Asia Summary and Highlights 5 September

Asia Session

Australian July Trade Balance came in as a surplus of AUD 6.009bn, beating estimates. But the detail is less enticing as we see another contraction in import on a m/m basis while export barely grew by 0.7%. It continue to point towards soft domestic consumption power. With regional equities mostly in the red, AUD/USD is trading 0.03% lower at 0.6723, NZD/USD fared better and is trading 0.03% higher at 0.6201 while USD/CAD rose 0.02%.

The July Japan Labor Cash Earning gave another strong read at 3.6% y/y, above BoJ's favorable 2%, but have moderated from June's 4.5%. The data is supportive for BoJ's hawkish policy tilt yet a sustained wage growth above 2% will be required for the BoJ to further tighten.  USD/JPY dipped in the early hours to 143.18 but has since partially reversed after BoJ's Takata saying "Japan's economy is recovering moderately though some weak signs". USD/JPY is currently trading 0.23% lower at 143.38 with U.S. Treasury Yields barely in the green and JGB yields slip. Else, EUR/USD is down 0.04% and GBP/USD is up 0.01%.

North American session

The USD slipped on July JOLTS job openings data, which fell by a steeper than expected 237k to 7.673m, though the data was not dramatically different from trend in our view. USD/JPY slipped a big figure to a low of 143.80, while EUR/USD rose to a high of 1.095 from 1.055 before settling near 1.080. EUR made marginal gains versus the GBP but corrected lower versus the CHF.

USD/CAD saw a marginal dip from around 1.3550 on an as expected 25bps easing from the Bank of Canada, despite a fairly dovish tone from the BoC, and extended losses as far as 1.35 after the US data. The CAD held on to its post-data gains better than AUD/USD.

Fed’s Bostic at the time of the JOLTS report said risks were now balanced while the Fed’s Beige Book subsequently showed activity rising in only three out of 12 districts.