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It might be manufacturing PMI day for Japan, Australia, and China, but a lot of other factors moved the major currencies.

  • AU AIG manufacturing index up from 54.8 to 55.0 in June
  • AU MI inflation gauge inches higher from 0.0% to 0.1%
  • China’s Caixin manufacturing PMI rises from 49.6 to 50.4 in June
  • AU building approvals drops by 5.6% vs. 4.8% uptick in May vs. 1.2% dip expected
  • Japan’s Tankan manufacturing index jumps from 12 to 17 vs. 15 expected in Q2 2017
  • Japan’s Tankan non-manufacturing index rises from 20 to 23 vs. 24 expected
  • Japan’s final manufacturing PMI up from 52.0 to 52.4 in June
  • Japan’s consumer confidence dips from 43.6 to 43.3 in June

Major Events/Reports:

China’s Caixin manufacturing PMI

The world’s second largest economy started the day with good vibes when a private firm’s more closely-watched manufacturing PMI exceeded market expectations.

You see, Caixin, a financial media company, printed a manufacturing PMI that clocked in at 50.6 in June. This is a BFD for at least two reasons.

First, it confirmed a similar improvement seen in the official manufacturing PMI released last Friday which showed stronger domestic AND foreign demand. Next, the reading inched above the 50.0 mark, which means that the industry is now officially back in expansionary territory. Awww yeah!

Details paint a mixed picture, though. According to the report, production and new orders rose, while both input and output prices also improved.

However, subdued demand continued to limit business optimism, so much so that backlogs increased as small and medium-sized firms continue to lay off workers.

Topsy-turvy session for the yen

The yen started the week in the green but not for good reasons.

In case you missed it, Japan’s Prime Minister Shinzo Abe and his Liberal Democratic Party suffered a historic loss in Tokyo’s metropolitan assembly as they only got 23 seats (from a possible 127). That’s a record low for the LDP, yo!

Tokyo Governor Yuriko Koike’s new Tomin First Party and a couple of independent candidates are now sitting at the throne with their 79 seats.

The clear message against Abe’s party caused a bit of risk aversion at the start of the session. Tides turned, however, when market players soon turned back to their central bank-speculating ways and priced in hawkish comments from other central bankers.

Nikkei ended the session after hitting a two-week low, while Australia’s A SX 200, Hang Seng, and the Shanghai index also ended mid-day trading in the green.

Major Market Mover(s):

JPY

The low-yielding yen opened the week with higher weekend gaps due to a bit of risk aversion, but soon lost to its higher-yielding counterparts as risk sentiment picked up.

USD/JPY opened at 112.11 after closing at 112.47 but is now trading at 112.54. Ditto for EUR/JPY, which fell from 128.45 to 128.03 before climbing back up to 128.34, and AUD/JPY which gapped from 86.43 to 86.15 but is now trading at 86.35.

USD

Unlike the yen, the Greenback recouped some of its losses against its higher-yielding counterparts. One possible reason is that the beginning of another trading quarter inspired Asian session traders to load up on their dollar-denominated investments once again.

EUR/USD is down by 16 pips (-0.14%) to 1.1402 and GBP/USD is down by 6 pips (-0.05%) to 1.2999.

Meanwhile, AUD/USD is down by 11 pips (-0.14%) to .7674, USD/CAD is up by 27 pips (+0.21%) to 1.2991, and NZD/USD is down by 8 pips (-0.11%) to .7322.

Watch Out For:

  • 6:30 am GMT: AU commodity prices (y/y)
  • 7:15 am GMT: Switzerland’s retail sales (y/y) (-0.8% expected, -1.2% previous)
  • 7:15 am GMT: Spain’s manufacturing PMI (55.6 expected, 55.4 previous)
  • 7:30 am GMT: Switzerland’s manufacturing PMI (56.5 expected, 55.6 previous)
  • 7:45 am GMT: Italy’s manufacturing PMI (55.3 expected, 55.1 previous)
  • 7:50 am GMT: France’s final manufacturing PMI expected to remain at 55.0
  • 7:55 am GMT: Germany’s final manufacturing PMI expected to remain at 59.3
  • 8:00 am GMT: Euro Zone’s final manufacturing PMI expected to remain at 57.3
  • 8:00 am GMT: Italy’s monthly unemployment rate to remain at 11.1%?
  • 8:30 am GMT: U.K.’s manufacturing PMI (56.4 expected, 56.7 previous)
  • 9:00 am GMT: Euro Zone unemployment rate to remain at 9.3%?