The Yuan sellers returned to Asia on the final trading day of this week, as escalating US-China trade tensions, PBOC devaluation and the Chinese economic slowdown fears continued to weigh on the domestic currency. The Yuan sell-off kept the US dollar broadly supported near 2-day tops, exerting bearish pressure on most majors.
However, the Aussie remained unfazed near 0.7370 levels, as upbeat Australian retail sales report underpinned. Meanwhile, the Kiwi was the biggest loser near two-week lows ahead of the 0.67 handle, as the recent oil-price weakness dampened the sentiment around the resource-linked NZD.
Both the EUR and GBP looked to stabilize after yesterday’s decline while the USD/JPY pair treaded water near 111.70 region amid mixed Asian equities and Treasury yields. Besides, gold futures on Comex remained weaker near the 2018 lows of $ 1211.70.
Main topics in Asia
BoJ Meeting Minutes: Financial conditions in Japan remain “accomodative”
The Bank of Japan (BoJ) has released the meeting minutes of the July 14th-15th policy meeting, though the impact is greatly muted after this week’s central bank statement saw broad adjustments to their current fiscal policies.
Australian June Retail Sales hold steady at 0.4%, just beating forecasts
June’s seasonally-adjusted Retail Sales for Australia came in at 0.4%, holding steady with the previous month’s reading and ticking just above the broader market’s expectations of a slowdown to 0.3%.
China Press: More PBOC RRR cuts may come this year
Bloomberg reports key headlines from the front page commentary ran in the China Securities Journal earlier today.
China’s Caixin services PMI drops to 52.8 in July, a big miss
China’s Caixin services PMI for July came in at 52.8 vs 53.7 expected and 53.9 last, which showed that Chinese business activity slowed down at a faster pace than expected.
Japan’s Aso believes BoJ steps this week help strengthen sustainability of monetary easing
Japanese Finance Minister Taro Aso is on the wires now, via Reuters, commenting on the Bank of Japan’s (BoJ) latest monetary policy tweak.
USD/CNY jumps to highest level since May 25, 2017
The USD/CNY pair gapped higher and rose to 6.8724, the highest level since May 25, 2017, on US-China trade worries and weaker PBOC fix.
India likely to delay raising tariffs on US goods – Reuters
Monideepa Mukherjee, a spokeswoman for India’s Ministry of Commerce and Industry, told Reuters late-Thursday, India is considering postponing the imposition of the retaliatory duties on the US products, as cited by Reuters.
China dethroned by Japan as world’s second-biggest stock market – Bloomberg
According to data compiled by Bloomberg, Japan outpaced China as the world’s second-biggest stock market.
Key Focus ahead
After an eventful calendar a day before, traders gear up for another one, as they seek to wrap up central banking events dominated busy week.
Markets brace for the final services PMI data from across the Euro area that will be reported from 0715 GMT onwards while the Swiss CPI will be released at 0715 GMT. Next of note remains the UK services PMI at 0830 GMT, which is expected to arrive at 54.7 in July versus 55.1 last. Also, the retail sales figures from the Euroland will be eyed for fresh trading impetus on the Euro.
However, the main event risk for today remains the US July labor market report due at 1230 GMT, with the key focus on the headline non-farm payrolls and wage growth numbers. The US economy is estimated to have added 190k new jobs last month versus 213k job additions seen in June. The average hourly earnings are expected to remain unchanged at 2.7% in the reported month.
At the same time, the Canadian trade balance will be reported, with a deficit of $ -2.30 billion expected in June. Later on, the US ISM non-manufacturing PMI report will drop in at 1400 GMT.
EUR/USD: Pennant breakdown confirmed ahead of US non-farm payrolls
The EUR/USD is on the defensive ahead of the US non-farm payrolls release. The data scheduled for release today at 12:30 GMT is expected to show that the US economy created 190K jobs in July compared to 213K jobs created in June.
GBP/USD trying to pump the brakes at 1.30 ahead of Friday’s US NFP action
Friday sees the Markit Services PMI for the GBP at 08:30 GMT, forecast to come in at 54.7 versus the previous showing of 55.1, though the mid-tier indicator will be largely overshadowed by the US NFP job report.
Trading the UK Services PMI with GBP/USD
The forward-looking indicator for the UK’s largest sector, services, is closely watched and moves the pound. The Market Impact Tool shows trading opportunities in both downside and upside surprises on this event.
US: Nonfarm payrolls to increase 205k in July – Goldman Sachs
Analysts at Goldman Sachs offer a sneak peek at what to expect from today’s US July labor market report slated for release at 1230 GMT.
How to trade the US NFP with EUR/USD
The US Non-Farm Payrolls report is one of the biggest movers and wages are in the limelight. The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
RBNZ to keep rates on-hold next Thursday – Reuters poll
The latest Reuters poll of analysts on the Reserve Bank of New Zealand (RBNZ) monetary policy decision due next Thursday, revealed the following:
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