Asia Summary and Highlights 1 July

Asia Session

The Q2 BoJ Tankan Index shows business resilience against the potential threat of U.S. tariffs. While short term outlook remain dim, it is better than Q1 figure. Inflation expectation is also above BoJ target rate. USD/JPY is trading down 0.23% to 143.65 with JGB yields sliding more than U.S. Treasury Yields.

Following momentum from previous session, major equity indexes are trading positively. Except Japanese equity indexes, which are negatively affected by potential U.S. tariffs, still at historically high level. AUD/USD is trading is down 0.16% at 0.6571. NZD/USD also down 0.02% at 0.6095 while USD/CAD is unchanged. Else, EUR/USD is down 0.03% and GBP/USD is up 0.05%. USD has been trading broadly stronger in the Asia session but abates throughout the session.

North American session

The USD slipped in North America, EUR/USD rising to 1.1780 from 1.1710. GBP/USD lagged, as EUR/GBP rallied to .8580 from .8555, but EUR/CHF remained weaker near .9340. The commodity currencies were firmer, AUD/USD at .6580 from .6530 while USD/CAD fell to 1.3625 from 1.3675. USD/JPY saw only modest losses, to 144.15 after rising to near 144.50. 

Manufacturing surveys from the Chicago PMI and Dallas Feds remained weak but focus was more on trade negotiations and continued attacks on Fed Chairman Powell coming from Trump. Treasury Secretary Bessent stated that tariffs could return to April 2 levels if countries were recalcitrant and speculated about using an upcoming opening in the FOMC in January to introduce a new Chair. Trump criticised Japan for not buying American rice while Bloomberg reported that the EU was willing to accept a 10% tariff from the US, but would be seeking key exemptions.