Asia Summary and Highlights 1 August

Asia Session

As market participants continue to digest the BoJ decision, USD/JPY continue to face more downward pressure with the Fed hinting cut is near. U.S. Treasury are recovering partially while JGB yields retreat, seems to be behind the rebound from 148.51 session low. USD/JPY is currently trading 0.36% lower at 149.36.

The June Australian Trade Balance came in stronger than May at AUD 5589m but both export and import contracted, pointing towards softer outlook. Regional sentiment is weak, led by the fall in Nikkei of more than 2% while U.S. major equity indexes are seeing more upside after big gains on Wednesday. AUD/USD is trading 0.17% lower at 0.6530, NZD/USD fared better and slipped 2 pips to 0.5950 while USD/CAD is unchanged. Else, EUR/USD is unchanged and GBP/USD down 0.08%. 

North American session

The USD made modest early losses after weaker than expected gains of 122k in July’s ADP employment report and 0.9% in Q2’s Employment Cost Index, though USD/JPY moves below 150 were not sustained. EUR/USD advanced to near 1.0850 before reversing back to near 1.08. AUD/USD made more sustained gains, erasing its post-CPI losses. USD/CAD saw lows below 1.38 assisted by a stronger than expected 0.2% rise in May Canadian GDP but could not hold below the figure. June US pending home sales, with a 4.8% bounce, were stronger than expected.

The FOMC left rates unchanged as expected. The statement got a very limited reaction but the USD edged marginally higher with the FOMC still needing greater confidence on inflation moving sustainably toward target before easing. However at the press conference Chairman Powell stated that a September rate cut could be on the table, though no decision had been taken. This saw the USD edge modestly lower, reaching fresh highs for the day versus GBP and AUD. USD/JPY moved back below 150 if not quite reaching fresh lows. EUR/USD remained below 1.0850 while EUR/CHF slipped to touch .95, USD/CAD settled near 1.38, slightly above the day’s low.