Forex news for Asia trading Monday 3 July 2017
- Fitch says a cooling housing market in China is set to weigh on the economy
- Australian building approvals detail - more
- Nomura says after Tokyo election result PM Abe unlikely to call snap poll now
- China Caixin / Markit Manufacturing PMI (June): 50.4 (vs. expected 49.8, previous 49.6)
- Australia - Building permits (approvals) for May: -5.6% m/m (vs. expected -1.3%)
- Australia - ANZ Job Advertisements (June): 2.7% m/m (prior +0.4% m/m)
- People’s Bank of China sets yuan reference rate at 6.7772 (vs. Friday at 6.7744)
- Australia - (June) Melbourne Institute Inflation: +0.1% m/m & 2.3% y/y (previous 0.0% m/m & 2.8% y/y)
- China - seasonal demand for USD rises in July (is this why the yuan has been higher?)
- Japan - Manufacturing PMI (June, final): 52.4 (preliminary was 52.0, May 53.1)
- Australia - CoreLogic House Price Index for June, +1.8% m/m (prior -1.1% m/m)
- BOJ Q2 Tankan: Large Manufacturing Index 17 (expected 15)
- Two new Australian PMIs started today - from CBA / Markit: results, summary.
- Australia - manufacturing PMI (June): 55.0 (May was 54.8)
- Update to AUD/USD view (from Westpac)
- Australia data today - the big one is Building Approvals (May)
- Monday - another weekend election result & another currency gap (yen edition)
- Japan - BOJ Q2 Tankan report due today ... (+ more on the Tokyo election)
- Trade ideas thread - Monday 3 July 2017
- Japan - Adviser to PM Abe says new governor needed at BOJ, Kuroda out of ideas
- Japan PM Abe's party big loss in Tokyo poll
- Economic data due from Asia today - plenty!
- Monday morning FX - 3 July 2017 - foreign exchange prices, early indications
Weekend:
- Merkel continues to hold a convincing lead in the latest German election poll
- Trump defends use of tweets as "modern presidential"
- Happy Canada Day: Here's how major currencies performed in June
- UK's Davis conducting Brexit talks with one hand tied behind his back
- China's Xi fires a warning shot as he swears in new Hong Kong leader
- Reserve Bank of Australia meet July 4 - preview
Opening moves in Asia for the week were dominated by the yen. The Tokyo election on Sunday resulted in a big loss for PM Abe's party. I posted some previews of what to expect back on Friday:
- More on this weekend's election in Tokyo
- Japan politics - heads up for Tokyo election this weekend
The policy implications I put in 'nutshell' form here (down the bottom of the post). The result saw the yen 'gapping' higher in very early trade on Monday even pre-NZ opening, USD/JPY slipped under 112.00 and yen crosses lower alongside. Gaps do have a tendency to fill, especially on news that is not wholly unexpected, and sure enough that is what has happened. USD/JPY:
Yen crosses price movement is more or less the same.
Data flow from Japan today (Bank of Japan Q2 Tankan along with Nikkei/Markit Manufacturing PMI (final, June)) came in better than expected, more support evidence for an improving Japanese economy. This would tend to argue for diminishing BOJ monetary policy support but on the other hand (and it's a big hand) inflation is still hugely missing its target, and based on last Friday's CPI data ('core-core', the equivalent of US 'core' inflation) its not even getting closer.
Data flow also from Australia today, with the AiG manufacturing PMI improving again and a new set of PMIs also coming out (from CBA/Markit); also well into 'expansion:
- Two new Australian PMIs started today - from CBA / Markit: results, summary.
- Australia - manufacturing PMI (June): 55.0 (May was 54.8)
From Australia we also got house price data ((June, up again), jobs ads data (June, up again), a private measure of inflation (June, 'core' inflation just a touch under the lower bound of the Reserve Bank of Australia target band) and, the focus for Australian data on the session, building approvals for May (a miss):
- Australian building approvals detail - more
- Australia - Building permits (approvals) for May: -5.6% m/m (vs. expected -1.3%)
- Australia - ANZ Job Advertisements (June): 2.7% m/m (prior +0.4% m/m)
- Australia - (June) Melbourne Institute Inflation: +0.1% m/m & 2.3% y/y (previous 0.0% m/m & 2.8% y/y)
- Australia - CoreLogic House Price Index for June, +1.8% m/m (prior -1.1% m/m)
(These are all in the bullets above ... just sticking them in here all in one place)
Movement in the Australian dollar was kept in a small range, from highs above 0.7690 in the morning it slipped under 0.7675. On Friday in the wrap I pointed out the 0.7700 area and above as being a big level for AUD/USD & there is much work to be done. That remains the case.
Part of the little slide in AUD/USD today is a wee bit of USD strength (US yields are a smidgin higher). EUR/USD and cable are both a touch soft as I update, while USD/CHF is on it session high, as is USD/CAD. NZD/USD, that is on its session low, as is gold priced in USD.
Oil is a few cents to the better to open the week.
Regional equities:
- Nikkei +0.29%
- Shanghai +0.04%
- HK +0.08%
- ASX -0.16%
Still to come ... plenty, but just a heads up to join me for the RBA announcement tomorrow, at 0430GMT: Reserve Bank of Australia meet July 4 - preview
