Asia Summary and Highlights 16 July
U.S. completes new wave of strikes on Iran, hits Bandar Abbas
Asia Session
U.S. military campaign continues and is hitting multiple targets on a daily basis. CENTCOM said it completed an evening wave of strikes on Iranian military sites including Bandar Abbas, hours after a separate strike on Greater Tunb Island. The goal remain at neutralizing Iran's capability of disrupting the Strait of Hormuz traffic. Clearly risk off and pointing towards sustained conflict, AUD/USD is trading 0.06% lower at 0.7002. NZD/USD is trading unchanged while USD/CAD rises 0.04% on cooling oil.
USD/JPY's range stays compressed as it lack impetus to move either side sustainably. USD is trading stronger against majors but is met with Japan's verbal intervention. Buyers and sellers of the pair are afraid to get wrong footed, in times of potential intervention or strong USD haven bids in case of further escalation in the Middle East. USD/JPY is trading 0.02% lower at 162.14. Else, EUR/USD is up 0.05%and GBP/USD is down 0.04%.
North American session
The USD slipped on a softer than expected US June PPI, -0.3% overall and +0.2% ex food and energy with downward revisions to May. July’s Empire State manufacturing survey at 15.6 from 5.7 was stronger, but price indices corrected lower. Fed’s Wash testified to the Senate with no major surprises, while Fed’s Cook stated the Fed could wait a bit for inflation to slow.
USD slippage accelerated in the afternoon with GBP/USD particularly strong, rising above 1.35 from 1.34. EUR/USD rose to 1.1470 from 1.1410 but USD/JPY was unable to sustain a move below 162 from near 162.40.
There was not much reaction to the Bank of Canada’s decision to leave rates unchanged. The BoC was more positive on the Canadian economy but toned down warnings of possible changes in rates in either direction. USD/CAD did fall to 1.4040 from 1.4075, but this was led by the USD. AUD/CAD was firmer as AUD/USD pushed above .70 to touch .7020.