Asia Summary and Highlights 2 July
Australian May Trade Balance Miss
U.S., Iran end Doha talks with no breakthrough
Asia Session
The May Australian Trade shows strong deficit. Export missed on sharp fall in gold and iron ore export while import remain pinned by high energy cost, so as cars, aircraft and telecoms. AUD/USD is trading 0.02% lower at 0.6892, dragged by poor regional sentiment. NZD/USD is trading 0.05% higher while USD/CAD is unchanged on relatively calm oil.
As USD/JPY hover around historic high, it is somewhat a surprise we do not hear more from Japanese officials on FX. Sources have told Reuters that Japanese officials are moving away from telegraphing intervention risk and toward unsignalled action designed to squeeze speculative yen short positions, seems to justify the latest silence. Element of surprise has always been critical but the amount of resources needed to execute a successful intervention seems to be heavy for the BoJ, even with their great war chest. USD/JPY is trading 0.11% lower at 162.39. Else, EUR/USD is up 0.07% and GBP/USDis up 0.1%.
North American session
The USD pushed higher in early trade despite a slightly softer than expected 98k increase in June’s ADP report on private sector employment, as markets awaited comments from Fed Chair Warsh. Warsh declined to provided forward guidance on rates but did say that inflation risks had reduced. The USD erased its earlier gains before stabilizing. June ISM manufacturing data at 53.3 from 54.0 was also on the low side of expectations, while prices paid slipped to 73.0 from 82.1, to their lowest since February.
EUR/USD was slightly softer near 1.1380, but GBP/USD picked up to 1.3280 from 1.3240 as EUR/GBP fell to .8570 from .86. EUR/CHF was also softer at .9210 from .9230. USD/JPY did not participate in the early USD bounce but recovered back above 162.50 after slipping to 162.40 from 162.70. AUD/USD failed to hold a move above .69 while a dip in USD/CAD found support at 1.42.