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The Eurozones preliminary July CPI annual rate was 2.9%, below the expected 2.90% and the previous reading of 2.80%.The Eurozones core CPI annual rate preliminary reading for July was 2.2%, below the expected 2.3% and the previous reading of 2.1%.US semiconductor stocks continued to rise in pre-market trading, with TSMC (TSM.N) up more than 4%, ASML (ASML.O) up 3.2%, Arm (ARM.O) up 4.8%, and Broadcom (AVGO.O) up more than 1.3%.On July 31st, Hong Kong stocks opened slightly lower this morning after four consecutive days of gains. The Hang Seng Index opened 21 points lower at 25837, and the market briefly dipped below the 250-day moving average, falling as much as 235 points to a low of 25622. It then gradually stabilized and rebounded, even turning positive at one point during the session. In the afternoon, the market continued to fluctuate around 25800. At the close, the Hang Seng Index rose 0.1%, with a gain of over 13% in July; the Hang Seng Tech Index rose 0.53%, with a gain of nearly 8% in July. The total turnover of the Hang Seng Index was HK$328.17 billion. On the sector front, storage concept stocks, AI newly listed stocks, and PCB concept stocks rebounded sharply, while brain-computer interface, electronic components, and commercial aerospace sectors also saw significant rebounds. Alcoholic beverages, consumer electronics, and mainland-traded stocks fluctuated and retreated, while automobile, paper, and dairy stocks weakened during the session. In terms of individual stocks, CSOPs double-leveraged long position in Hynix (07709.HK) surged over 67.5%, CSOPs double-leveraged long position in Samsung Electronics (07747.HK) surged over 48%, Zhipu (02513.HK) surged over 14.5%, MiniMax (00100.HK) surged over 13%, and Laopu Gold (06181.HK) surged over 10%; Xiaomi Group (01810.HK) fell over 7%, and Budweiser APAC (01876.HK) fell over 6.5%.The European Central Bank (ECB) reported that in June, the composite borrowing cost index for new corporate loans rose 15 basis points to 3.79%; the composite interest rate index for new household home loans remained largely unchanged at 3.51%. The composite interest rate for new corporate time deposits rose 17 basis points to 2.21%; the overnight corporate deposit rate rose 6 basis points to 0.59%. The composite interest rate for new household time deposits rose 13 basis points to 2.09%; the overnight household deposit rate remained largely unchanged at 0.28%.

The USD/JPY has dropped from its monthly high above 137.00, as have yields, and the Japan PMI has been mostly ignored

Alina Haynes

Aug 23, 2022 14:59

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USD/JPY took offers to retest intraday low around 137.20 during the Asian session on Tuesday, extending the decline from a monthly high as market mood deteriorated amid conflicting signals and a cautious mindset ahead of the significant data/events. The yen pair has fallen for the first time in six days, despite the fact that recent economic figures from Japan have been disappointing.

 

Jibun Bank Manufacturing PMI in Japan dropped to 51.0 in August, down from 51.8 in July and 52.1 in June, according to preliminary data. The Jibun Bank Services PMI also fell, from 50.7 in the last poll and 50.7 as expected by the market, to 49.2.

 

With a decline of almost two basis points from its monthly high of 3.04% to its current level of 3.02%, the interest rate on the 10-year US Treasury note has fallen (bps).

 

The decline in benchmark US bond yields could be attributable to a lack of strong triggers and inconsistent rumors regarding the People's Bank of China (PBOC). Recent articles in China's Securities Times suggest that the PBOC may lower RRR this year to compensate for the end of the medium-term lending facility (MLF). The paper suggests that a reduction in reserve requirement ratios (RRR) could lead to reduced prime lending rates. Notably, this report comes from a government organization.

 

Some variables, such as Japan's propensity to print more money and the decision of Japanese exporters to book gains, may have contributed to the recent decline in the USD/JPY exchange rate. For the fiscal year commencing in April 2023, the Japanese Ministry of Finance would reportedly need $26.9 trillion yen ($195.5 billion), according to a report from Reuters on Tuesday.

 

In spite of this, projections of higher Fed rates and stronger US data, plus with geopolitical concerns over Russia and Ukraine, kept USD/JPY buyers bullish.

 

Today's agenda is ornamented with the preliminary readings of the US PMIs for August, as well as the US New Home Sales for July and the Richmond Fed Manufacturing Index for August. However, Fed Chair Jerome Powell's remarks at the Jackson Hole Symposium, which will be issued on Friday, will be key for establishing clear instructions.

 

The 137.50 to 55 zone is anticipated to act as support for USD/JPY bears seeking to achieve the low near 139.40 in July. Although buyers should be cautious as long as the price is trading above the 50-day moving average (135.57), the MACD and RSI are both trending upwards, indicating a possible price increase (14).


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