Asia Summary and Highlights 16 Jul
Nikkei reports that Prime Minister Ishiba's government risks losing its majority
China and Australia to review Free Trade Agreement
Asia Session
The risk sentiment is broadly positive on Wednesday's Asia session. U.S. three major equity indexes have their toes in the green with regional equities performing individually, led by HSI. China and Australia have agreed to review Free Trade Agreement, may signal an improvement in relationship. AUD/USD is trading 0.14% higher at 0.6523, NZD/USD is trading 0.06% higher at 0.5948 while USD/CAD slips 0.03%.
With the upper house election due by the weekend for Japan, Nikkei reports that Prime Minister Ishiba's government risks losing its majority. While it is unlikely to topple the government yet, it will have critical implication towards the Japanese fiscal spending and taxes. Market participants are anticipating more stimulus if the Ishiba government face another losing battle this weekend. USD/JPY is trading 0.18% higher at 149.10. Else, EUR/USD is up 0.13% and GBP/USD is up 0.06%.
North American session
US June CPI was as expected at 0.3% overall, but lower than expected at 0.2%, 0.228% before rounding, ex food and energy. The USD and UST yields saw an initial modest dip on the data but subsequently rebounded, with some components of goods seeming to get a lift from tariffs. EUR/USD fell to 1.16 after peaking just below 1.17, while USD/JPY reached 149 from near 147.75. EUR/GBP was softer near .8665.
Canadian CPI was as expected at 1.9% from 1.7% and with the core rates stable to higher was seen as arguing against a July BoC easing. USD/CAD rose to 1.3715 from 1.3675 but AUD/CAD was lower near .8940 after peaking at .8995.
July’s Empire State manufacturing survey, released with the CPI, was stronger at 5.5, its first positive since February, from -16.0 in June. Trump announced a trade deal with Indonesia under which Indonesia would pay a 19% tariff while committing to buy a variety of US goods.