Article Highlights

  • Japanese July household spending down by 0.2% y/y vs. 0.9% forecast
  • Tokyo core CPI down by 0.1% as expected
  • Japanese national core CPI showed flat reading in July
  • Japan’s jobless rate ticked down from 3.4% to 3.3%
  • Japanese July retail sales up by 1.6% y/y vs. 1.1% forecast, 1.0% previous
  • RBNZ bought 121 million NZD net in July
  • Swiss GDP, German and Spanish flash CPI due
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Slow and steady does it! Asian equities were able to grind higher in the past few hours, allowing risk appetite to pick up in the forex market as well. Data from Japan came in mostly better than expected, with only the July household spending report showing a worse than expected read of -0.2% versus the projected 0.9% gain.

Japanese retail sales printed an annualized 1.6% increase for the same month, outpacing the consensus of a 1.1% rise and the previous 1.0% gain. The jobless rate ticked down from 3.4% to 3.3% while the national core CPI indicated a flat reading instead of showing the projected 0.2% decline. Meanwhile, the Tokyo core CPI came in line with expectations of a 0.1% dip.

Unfortunately for yen bulls, the risk-on forex market vibes kept the Japanese currency’s gains limited. USD/JPY is holding steady around 121.00 (-0.02%), EUR/JPY is also flat at 136.22, GBP/JPY is up 17 pips (+0.09%), AUD/JPY is up 7 pips at 86.75 (+0.09%), and NZD/JPY is down 18 pips (-0.24%).

Rumor has it that the RBNZ is pretty satisfied with the Kiwi’s current forex levels, as the central bank reportedly bought 191 million NZD net in July. RBNZ officials indicated that these were made “due to routine portfolio rebalancing transactions” and that the “transactions do not signal any view on the exchange rate and are not expected have had any material impact on the exchange rate.”

Coming up, we’ve got a few potential market-movers from Switzerland and the euro zone. The Swiss Q2 GDP is up for release at 6:45 am GMT and it is expected to show a 0.1% contraction to follow the previous -0.2% GDP reading, possibly putting the economy in recession. Weaker than expected data might mean more losses for the Swiss franc while a positive reading could spur gains. Do keep your eyes peeled for the release of the preliminary CPI readings from Germany and Spain since these are expected to reflect the recent tumbles in commodity prices for August.

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