The NZD is the strongest and the JPY is the weakest as the North American session begins

The NZD is the strongest and the JPY is the weakest as the North American session begins. The Bank of Japan (BOJ) got its shot today when it announced its interest rate decision. They decided to keep its short-term benchmark interest in the negative and affirmed its commitment to ongoing asset purchases and yield curve control to boost the economy. Despite this anticipated move, there were hints from Governor Kazuo Ueda about a potential shift from the negative rate policy due to rising wages and inflation. Recent data revealed that the consumer price index surpassed the BOJ’s 2% target for the 17th month in a row, with a core metric reaching a four-decade peak. Following the BOJ’s announcement, Japanese 10-year bond yields dropped and the yen depreciated versus the U.S. dollar, and approached the JPY low (USDJPY high) reached yesterday at 148.453. The high price reached 148.409 where traders leaned against those highs in the USDJPY. The price trades at 148.25 currently.

The depreciation led Finance Minister Shunichi Suzuki to emphasize the significance of trade for Japan’s economy and the government’s readiness to take necessary actions. He highlighted that Japan had previously intervened in the currency markets to stabilize the yen.

In other news, released in the European session today, UK retail sales month-on-month showed an increase of 0.4%, slightly below the forecasted 0.5% but a notable improvement from the previous -1.1%. The BOE kept rates unchanged yesterday by the slimmest of margins (5-4 vote).

In the EUR zone, the French Flash Manufacturing PMI came in at 43.6, below the expected 46.2 and below the previous 46.01 (lowest since May 2020). The French Flash Services PMI was recorded at 43.9, again falling short of the anticipated 46.0 and below the prior 46.01(lowest since February 2021).

Germany’s Flash Manufacturing PMI was 39.8, slightly above the forecasted 39.5 and an improvement from the previous 39.1. The number was still dragging near lows going back to the start of the pandemic in 2020. Not so bad, is the German Flash Services PMI came in at 49.8, surpassing the expected 47.2 and the prior 47.3. Although higher, it still remains below the 50 level indicative of more of a contraction.

For the GBP, the Flash Manufacturing PMI was 44.2, better than the forecasted 43.3 and the previous 43.01 (which was the lowest since May 2020). The Flash Services PMI was 47.2, below the anticipated 49.3 and the prior 49.51. Mixed but still weak

The Detroit Three automakers face the possibility of an expanded strike if they fail to reach new labor agreements with the UAW union by the 12:00 ET deadline on Friday. Last week, the union initiated strikes at assembly plants of General Motors, Ford, and Stellantis in Missouri, Michigan, and Ohio. These plants manufacture popular vehicles like the Ford Bronco, Jeep Wrangler, and Chevrolet Colorado. UAW President Shawn Fain will address the situation two hours before the deadline, specifying which plants might join the strike if no agreement is finalized. Industry experts predict that if the strike broadens, it will likely affect plants producing profitable pickup trucks, including Ford’s F-150, GM’s Chevy Silverado, and Stellantis’ Ram.

Today in the US session, its flash Manufacturing and service PMI will be released (at 9:45 AM ET). The expectations are for 48.0 versus 47.9 last month. The service PMI is expected at 50.6 versus 50.5 last month.

In Canada they will release their retail sales for July with expectations of a rebound to 0.4% versus 0.1% last month. The ex orders orders is expected to rise by 0.5% versus -0.8 last month.

US stocks are rebounding in early trading after sharp declines last 2 trading days. Each of the major indices close below their 100 day moving averages for the 1st time since January 19, 2022. US yields are mixed. Apple iPhone 15 goes on sale today. Apple shares are trading up $1.08 or 0.62% in premarket trading

A snapshot of the markets as the NA session gets underway shows:

  • Crude oil is trading up $0.90 or 1.0% at $90.53
  • Spot gold is trading up $5.71 or 0.30% at $1925.29
  • Spot silver is trading up $0.29 or 1.27% at $23.69
  • Bitcoin is trading at $26,644. At this time yesterday the price was trading at $26,717. .

In the US premarket for US stocks, major indices are trading higher after closing at session lows (and lower) for the 2nd consecutive day:

  • Dow Industrial Average futures are implying a gain of 37 point after yesterday’s fall of -370.46 points
  • S&P index futures are implying a gain of 11 point after yesterday’s decline of -72.20 points
  • NASDAQ futures are implying a gain of 66 point after yesterday’s tumble of 245.14 points

In the European equity markets, the major indices are mostly lower with the exception of the UK FTSE 100

  • German DAX, -0.03%
  • France’s CAC, -0.35%
  • UK’s FTSE 100, +0.59%
  • Spain’s Ibex, -0.24%
  • Italy’s FTSE MIB, -0.34% (10 minute delay)

In the Asian Pacific today, equity markets closed mixed

  • Japan’s Nikkei 225, fell -0.52%
  • China’s Shanghai Composite, rose 1.55%
  • Hong Kong’s Hang Seng, rose 2.28%
  • Australia’s S&P/ASX 200, rose 0.05%

In the US debt market, yields are mixed with lower yields in the front and marginally higher yields in the long run:

  • 2-year yield, 5.124% -2.3 basis points
  • 5-year yield, 4.597% -1.8 basis points
  • 10-year yield, 4.482% +0.2 basis points
  • 30-year yield, 4.568% +1.6 basis points

In the European debt market, benchmark 10-year yields are trading higher. The UK 10 year yield is leading the way despite the unchanged policy:

This article was written by Greg Michalowski at Source