Asia Summary and Highlights 4 Jul
Market sentiment calms as Trump began to send tariff letters
Asia Session
The May Japan household spending came in strong at 4.7%, the strongest level seen in the past few years. It would be a welcoming sign for the BoJ to hike rates as consumption has been restrained by negative real wage lately. USD/JPY is trading 0.39% lower at 144.34.
Market sentiment calms after the post NFP boost as Trump said he will begin to send tariff letters to other countries. However, he has given other countries almost another month for negotiations, as tariff payment begins on first of August. Major equity indexes are toes in the red and see AUD/USD trading unchanged, NZD/USD is trading 0.04% higher at 0.6072 while USD/CAD slips 0.07%. Else, EUR/ISD is up 0.2% and GBP/USD is up 0.15%.
North American session
US non-farm payrolls saw a stronger than expected 147k increase with a fall in unemployment to 4.1% from 4.2%, but details were mixed with private payrolls at 74k and average hourly earnings at 0.2% both weaker than expected. At the same time weekly initial claims fell to 233k from 237k in a third straight decline. Later ISM services rose to 50.8 from 49.9 and in the afternoon the House passed the Senate’s budget bill, sending it on to President Trump.
The USD initially bounced on the employment report and UST yields rose with the fall in unemployment making a July ease look unlikely. However, the bounce was sustained only for USD/JPY, which rose over a big figure to 145. Other pairs largely returned to near pre-data levels, which is where GBP/USD and AUD/USD broadly remained. EUR/USD at 1.1750 ended below pre-data levels but off post-data lows while USD/CAD after bouncing above 1.37 on the data fell slightly below pre-data levels.