Asia Summary and Highlights 6 Aug

Asia Session

The June Labor Cash Earning has rebounded from the low in May to 2.5% y/y. It is a positive sign for the BoJ as a steady wage growth above 2% is crucial for sustainable inflation target to be reached. Yet, the boost to consumption maybe limited for real wage remain negative. USD/JPY is trading 0.17% lower at 147.42 as JGB yields correct partially.

The broad risk sentiment is positive on Wednesday, both regional and U.S> three major equity indexes are in the green. With USD trading broadly lower, major currency pair are gaining with the antipodeans leading.  AUD/USD is trading 0.28% higher at 0.6490, NZD/USD is trading 0.33% lower at 0.5920 with Q2 labor data slightly weaker than expected. Else, EUR/USD is up 0.03% and GBP/USD is up 0.05% while USD/CAD unchanged.

North American session

June’s US trade deficit of $60.2bn was down from $71.7bn in May and the lowest since September 2023. This was followed by a weaker than expected July ISM services index of 50.1 from 50.8. There was little instant reaction to the data but the USD, with longer end UST yields. subsequently slipped. EUR/USD rose to 1.1570 from 1.1540. Gains in GBP. AUD and CAD were more modest while USD/JPY remained firmer near 147.70, meaning that EUR/JPY near 170.80 was up by close to a big figure on the day.