Asia Summary and Highlights 30 July
BoJ hiked rates to 0.25% and announced 3 trillion JPY bond purchases reduction in two years
Asia Session
After the "leak" on Tuesday's New York session, USD/JPY has been front running the more hawkish expectations of 25bps hike. The BoJ officially hiked rates to 0.25% and announced 3 trillion JPY bond purchases reduction in two years in the Asia session and is met with some sell the fact trade. It is a more hawkish tilt as the forward guidance suggest more rounds of tightening to come while bond purchase reduction will be in a monthly 400b accelerating manner to roughly 3t in June 2026. USD/JPY initially dipped by a figure to 151.59 before rebound to trade 0.24% to 153.11 with JGB yields outperforming the U.S. T-yields.
The Australian headline Q2 CPI bangs in estimate of 3.8% and rose 0.2% from 3.6% in Q1 but the RBA trimmed mean is 0.1% lower than consensus at 3.9%. It seems to wash away the hawkish expectation for RBA in the coming meeting and drove the Aussie lower. AUD/USD is trading 0.67% lower at 0.6493 despite global risk sentiment positive, NZD/USD fared better to trade 0.06% higher at 0.5906 while USD/CAD slips 0.04% as oil rose almost a dollar. Else, EUR/USD is down 0.05% and GBP/USD is up 0.04%.
North American session
USD/JPY fell sharply from 155 to touch as low as 153 with only a marginal subsequent correction, with UST yields also lower. The USD however saw gains against EUR and GBP, with EUR/USD briefly touching below 1.08 before a modest correction. This saw EUR/JPY falling from above 167.50 to briefly touch 165.50. While EUR/GBP was fairly stable EUR/CHF slipped to .9560 from near .96. AUD/USD and USD/CAD saw little net movement, with the latter showing slightly more volatility.
The USD saw only a brief boost from stronger than expected June JOLTS job openings, at 8.184m from an upwardly revised 8.23m. At the same time July consumer confidence rose to 100.3 from a downwardly revised 97.8.