Asia Summary and Highlights 17 July
Japan Deputy Chief Cabinet Secretary Aoki: Concerned about speculative FX market movements
Australia June Unemployment Rate 4.3%
Asia Session
After a brief break and fail of 149 level on Wednesday, USD/JPY is once again heading to challenge the level again on Thursday's Asia session. We began to hear some verbal intervention from Japan Deputy Chief Cabinet Secretary Aoki voicing the concern of speculative FX market movements but does not seem to be stalling the up move yet. With U.S. Treasury Yields outperforming JGB yields, USD/JPY is trading 0.35% higher at 148.38.
The June Australian employment data is a miss with higher unemployment rate (4.3% y/y) and lower than expected headline employment change (+2k). Market participants are viewing that as a pin for an RBA cut next month. AUD/USD fell by 0.55% to trade at 0.6492, NZD/USD is also down 0.26% to 0.5931 while USD/CAD rise 0.23%. Else, EUR/USD is down 0.13% and GBP/USD is down 0.17%.
North American session
US June PPI was weaker than expected, unchanged both overall and ex food and energy, and the USD saw a modest dip, but the USD subsequently built gains, with EUR/USD falling below 1.16. US June industrial production as slightly stronger than expected with a 0.3% increase.
The USD turned sharply negative on a CBS report that Trump had consulted Republican lawmakers about firing Fed Chairman Powell, with EUR/USD surging above 1.17 and USD/JPY falling below 147 from 148.75, particularly after a White House official was reported to say Trump was likely to fire Powell soon, and the New York Times reported that a dismissal letter had been written. However, the move was corrected though not fully reversed on comments from Trump, who while critical of Powell denied that he was planning to fire him. The USD settled with modest losses from pre-data levels, EUR/USD near 1.1630 and USD/JPY near 147.90. Other pairs had similar moves.
Trump also sated that a trade deal with India was close but Japan would probably live by the recent trade letter. The Fed’s Beige Book reported a slight increase in activity, contrasting a slight decline on June 5, but with continued tariff-related cost pressures.