The yen softens mildly at a quiet Asian session accompanied by a rebound in the Nikkei as markets digest Prime Minister Shinzo Abe’s resignation. The dollar also pairs some of last week’s steep losses. But in general, head pair and cross are delimited in very tight area. Economic data from Japan and China are ignored. The New Zealand Dollar is also paying close attention to easing. The focus is on the busy calendar ahead of us, with the RBA steering wheel decision tomorrow as the first major event.
Technically, 1.1965 resistance in EUR / USD, 0.9009 support in USD / CHF and 105.10 support in USD / JPY would be the focuses for now. They will determine if the Dollar can find some breathing elsewhere or that the supply would accelerate. In addition, traders could turn to the EUR / GBP cross, extending the decline from 0.9175 against 0.8864 support. EUR / AUD could also run towards 1.6033 low.
In Asia, the Nikkei closed at 1.12%. Hong Kong HSI has risen 0.18%. China Shanghai SSE has risen 0.15%. The Singapore Strait Times has risen 0.05%. Japan’s 10-year JGB yield is down -0.0088 at 0.050.
Japanese industrial production rose a record 8.0% mother, still away from pre-pandemic level
According to data from Japan’s Ministry of Economy, Trade and Industry, industrial production grew by 8.0% mother in July, well above expectations of 5.0% mother. It is also the fastest jump on the record since 1978. Producers expect production to grow further by 4.0% mother in August and further by 1.9% in September. However, METI expects output to remain below pre-pandemic levels for some time. During the year, production was down to -16.1% yyyy.
On the other hand, retail sales fell -2.8% yy in July, much worse than expected at -1.7% yy. Housing starts fell -11.4%, better than expected at -13.7% yyyy. Consumer confidence rose to 29.3, down from 29.5, missing expectations of 29.4.
As Prime Minister Shinzo Abe steps down, it is reported that the ruling LDP will vote on September 14 to elect a new leader.
New Zealand ANZ business confidence fell to -1441.8, activity fell to -17.5
ANZ business confidence in New Zealand fell to -441.8 in August, down from July -331, but was revised slightly up from the initial reading of -42.4. Confidence is particularly weak in agriculture at -80.6 with services at -43.3, retail at -33.3, production at -37.3 and construction at -16.1.
Expectations for own activity also fell back to -17.5, down from July -8.9, worse than the preliminary reading of -17.0. Retail trade was worst at -27.5, followed by agriculture at -22.6, production at -19.4, services at -13.9 and construction at -12.1.
ANZ added: “The recent resurgence of COVID-19 is discouraging and has taken a real toll on businesses, particularly in Auckland. However, it seems that companies are looking through it to some extent, as intentions and expectations saw a relatively modest decline compared to the first half of the month. ”
From Australia, TD securities inflation rose by 0.1% mother in August. Credit in the private sector fell -0.1% mother in July. The company’s gross operating profit increased 15.0% qoq in Q2.
Chinese PMI output fell to 51.0 in August.
Official Chinese PMI Manufacturing fell to 51.0 in August from 51.1, slightly below expectations of 51.1. PMI Non-Manufacturing, on the other hand, rose to 55.2, up from 54.2, above expectations to 54.0.
Zhao Qinghe, a senior statistician with NBS, noted that “demand continues to recover and supply and demand cycles are gradually improving” with new order index rising for the 4th month to 52.0. Trade also improved with new export orders rising 0.7 to 49.1.
However, some companies in Chongqing and Sichuan reported an impact from the heavy rains and floods, resulting in a prolonged purchasing cycle for raw materials, reduced orders and a pullback in factory production. “
Dollar examines ISMs and NFPs; Aussie awaits RBA and GDP
It’s a pretty busy and important week ahead. US ISM manufacturing and non-manufacturing as well as non-farm wages will be shown. Dollars need something really impressive to turn the corner. The Fed will also release the financial report from the Beige Book.
The Australian dollar, which has been the strongest recently, is also facing a series of tests. The RBA is generally expected to keep monetary policy unchanged and to be committed to further stimulus measures. Australia’s second quarter GDP is also another high, while PMIs from China could trigger some volatility for the Aussie.
Elsewhere, Japan’s industrial production and retail sales, eurozone CPI and unemployment, employment in Canada may also catch some attention. here are some highlights for the week:
- Monday: Japanese industrial production, retail sales, consumer confidence, housing starts; China PMIs; New Zealand ANZ business trust; Germany CPI; Swiss retail; Canada IPPI and RMPI.
- Tuesday: Australia AiG manufacturing, building approvals, current account, RBA decision; New Zealand building permits; Japan’s capital expenditures, final production of PMI. China Caixin PMI manufacturing; Swiss PMI manufacturing; Final production in PMO for euro area, CPI flash, unemployment rate; Germany’s unemployment; UK mortgage approvals, M4 money supply, final PMI manufacturing; Canada PMI manufacturing; US ISM Manufacturing.
- Wednesday: New Zealand terms of trade; Australia GDP; Japan’s monetary base; Germany’s retail sales; Eurozone PPI; Canada labor productivity; US ADP employment, factory orders, Fed’s Beige Book.
- Thursday: Australia AiG Construction, Trade Balance; China Caixin PMI services; Swiss CPI; Finally, PMI services in the euro area, retail sales; UK PMI services finally. Canada’s trade balance; US unemployment claims, non-farm productivity; trade balance; ISM non-manufacturing.
- Friday: retail in Australia; Germany factory orders; UK PMI construction; Canada Employment, Ivey PMI; U.S. non-farm wages.
Daily USD / JPY Outlook
Daily pivots: (S1) 104.72; (P) 105.83; (R1) 106.47; More …
Intraday in USD / JPY remains neutral as it is still delimited in the range 105.10 / 107.05. Further declines are beneficial as long as 107.05 resistance lasts. Break of 105.10 first gives test of 104.18 support again. Further pause resumes the entire decline from 111.71. On the upside, the break of 107.05 will revive the case of reversal in the short term and bring stronger rally.
In the bigger picture, the USD / JPY remains in a long-term falling channel, starting back in 118.65 (Dec. 2016). Therefore, there is as yet no clear indication of trend reversal. The downtrend may still extend through 101.18 lows. However, a sustained break of 112.22 should confirm the completion of the downtrend and turn the outlook to bullish for 118.65 and above.
Update of economic indicators
|23:50||JPY||Industrial production M / M Jul P||8.00%||5.00%||1.90%|
|23:50||JPY||Retail J / Å Jul||-2.80%||-1.70%||-1.30%|
|01:00||CNY||Manufacturing PMI aug||51||51.1||51.1|
|01:00||CNY||Non-manufacturing PMI aug||55.2||54||54.2|
|01:00||AUD||TD Securities Inflation M / M Aug||0.10%||0.90%|
|01:00||NZD||ANZ Confidentiality aug||-41.8||-42.4|
|01:30||AUD||Private sector credit M / M Jul||-0.10%||0.20%||-0.20%|
|01:30||AUD||The company’s gross operating profit Q / Q Q2||15.00%||-6.00%||1.10%||1.40%|
|05:00||JPY||Homes start Å / Y Jul||-11.40%||-13.70%||-12.80%|
|05:00||JPY||Consumer confidence index August||29.3||29.4||29.5|
|06:30||CHF||Real retail sales Å / Y Jul||0.90%||1.10%|
|00:00||EUR||Germany CPI M / M Aug P||-0.20%||-0.50%|
|00:00||EUR||Germany CPI Å / Å Aug P||0.20%||-0.10%|
|00:30||CAD||Industrial product Price M / M Jul||0.50%||0.40%|
|00:30||CAD||Commodity price index Christmas||6.90%||7.50%|