Asia Summary and Highlights 3 July

Asia Session

The May Australia Retail sales have come in stronger than expected at 0.6% m/m. It is a positive sign for the Australian economy as consumption has been slower than 2023 so far with continuous high inflationary pressure. Risk sentiment is mostly positive except in China, which seems to be dragged by the missed private service PMI. AUD/USD is trading 0.16% higher at 0.6677, NZD/USD slipped 0.04% to 0.6075 while USD/CAD rose 0.03%.

USD/JPY has reversed Tuesday's reversal and is trading 0.24% higher at 161.80, breaking the weekly high. The move seems to be accelerated by the first contraction in service PMI in two years. U.S. Treasury Yields are also outperforming JGB yields. Else, EUR/USD is down 0.06% and GBP/USD is down 0.02%.

North American session

The USD slipped early in the North American session, the move extended by dovish-leaning comments from Fed’s Powell, who said that prices were showing signs of resuming disinflation, though more such data was needed. The reaction to Powell was however largely erased when May job openings showed an unexpected rise of 221k though this followed two straight declines of over 400k.

The afternoon saw the USD moving back to near the post-Powell lows, though USD/JPY was more resilient, settling in mid-range near 161.50. EUR/USD advanced to near 1.0750 while USD/CAD saw a particularly sharp fall to 1.3670. AUD/USD showed only modest gains to .6670. EUR advanced versus the CHF but slipped versus the GBP.