FX News Today
FX Update: Yen underperformance, Dollar softness and Aussie Dollar outperformance have been the main themes in Asian markets into the London interbank opening, along with a side-theme of Euro firmness. The Japanese currency came under pressure following the release of Japanese inflation data, which showed BoJ-watched national core CPI figure coming in at a benign 0.8% y/y, the same rate as June and disappointing the median forecast for a 0.9% reading. USDJPY rose to near three-week highs near 111.50 despite an otherwise generally softer Dollar tone, while EURJPY and AUDJPY were notable gainers among Yen crosses. The Aussie Dollar rallied on news that Treasurer Scott Morrison will become Australia’s new prime minister, which has brought some stability to a volatile period in Australian politics. AUDUSD posted a high of 0.7289, recovering from a nine-day low at 0.7238. Stock markets have been choppy, with the MSCI Asia-Pacific ex-Japan equity index rebounding into the black from intraday losses as Chinese equities posted an after-lunch rebound. This rebound came despite Beijing saying that it will keep retaliating to “unreasonable” US trade measures. Japan’s Nikkei 225, meanwhile, closed with a 0.85% gain, outperforming on the back of a weaker Yen. EURUSD lifted back above 1.1550, extending the modest lift out of yesterday’s three-day low at 1.1529.
Asian Market Wrap: 10-year Treasury yields are up 0.2 bp at 2.828% outperforming most Asian bond markets. 10-year JGBs up 0.7 bp at 0.091% with Topix and Nikkei gaining 0.58% and 0.83% respectively as a weaker than expected inflation number weighed on the Yen. The ASX rose 0.31% and Australia’s bond yields backed up from yesterday’s lows after Treasurer Scott Morrison replaced Turnbull as prime minister. Elsewhere across Asia markets traded mostly lower. The Hang Seng is down by -0.39%, the CSI 300 down by -0.8% and Shanghai Comp down by -0.06%, after mid-level trade talks between China and the US didn’t produce any breakthrough, although China called the meetings constructive and honest. Attention is now moving to Powell’s comments at the Jackson Hole symposium where Kuroda and Draghi are notable absentees this year. US futures are up ahead of Powell’s address and oil prices are also higher with the October Nymex future trading at USD 68.37 per barrel.
Charts of the Day
Main Macro Events Today
- Jackson Hole Symposium – Fed Chairman Jerome Powell to speak at the annual Jackson Hole Symposium.
- Durable Goods Orders – Durable orders are expected to decline since aircraft orders are very volatile. However, core durable goods are expected to increase by 0.5% in July.
- Baker Hughes US Oil Rig Count – An important business barometer for the drilling industry and its suppliers. The active rig count acts as a leading indicator of demand for products used in drilling, completing, producing and processing hydrocarbons.
Support and Resistance Levels