USD/JPY, AUD/NZD, GBP/USD flows - Period end, CPI data a main focal point
USD/JPY dips in Asia on period end JPY demand
AUD extends pullback through RBA, as CPI data comes in below mkt
UK GDP revised up, GBP still trying to level
Focus on EZ national CPI prints, early headlines on the upside
Period end (FY-half, quarter) lifts the yen overnight, with a USD/JPY low of 156.35, and new lows on crosses, dropping through the Tokyo fix. Pair back to 157, where options expiries it today. Larger expiries the next couple of days skew higher in the 157 to especially 158 area which may tend to offer some support, although there could be more JPY buying to be seen yet today at the London fix.
Japan industrial production with a 1.7% decline (mkt +1.7%) ignored, especially with forecasts of over 3% for the next 2 months.
Australia CPI, the key data focus in Australia, comes in softer than expected with the trimmed mean 0.2% vs mkt 0.3%, if sticking at 3.6%y/y as expected. Data goes with the grain of the corrective tone continuing through the RBA, with AUD/NZD off 40-50 ticks. 1.2285 May high and the 1.2250/1.2200 congestion area is next pullback support on the cross.
UK GDP data continues to hold up better than expected, Q2 GDP revised up to 0.5%q/q from 0.4%, and 1.4%y/y from 1.2%, bolstered by strong business investment. Sterling still trying to base out and see if it can consolidate/correct out of its recent overstretched (dollar-led) weakness.
EZ national inflation prints also in focus this morning, and following firmer Spanish numbers yesterday, France kicks off with another firm headline number, yr/yr up to 3.4% vs mkt 3.1%. German states follow. Firm data keeps the ECB pressured to follow up with another hike, although Lagarde ‘measured response’ remarks early week have the focus more on Dec than Oct (fully priced in vs around 35%).