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The Aussie and yen were big movers during the session, as Australia prints its jobs report while the BOJ revised its economic outlook.

  • Japan’s trade surplus narrows down in June
  • Australia’s employment numbers revised lower in May
  • Australia’s unemployment rate remains at 5.6% in June
  • Australia adds net 14,000 jobs in June
  • AU NAB business confidence saw a modest lift in June
  • BOJ keeps policies unchanged as expected
  • BOJ upgrades economic outlook, downgrades CPI forecasts

Major Events/Reports:

Japan’s trade data

Before the BOJ’s event we saw the trade numbers for the world’s third largest economy. The report printed a surplus of 439.9B JPY in June, missing expectations of a 484.7B JPY reading and marks a 36% decrease from last year’s 686.5B JPY surplus.

Details still point to strong growth, however. Exports rose for a seventh consecutive month in June, this time rising by 9.7% when analysts had expected a 9.5% increase and following May’s 14.9% growth figure.

Meanwhile, imports grew by 15.5% from a year earlier; beating estimates of a 14.4% annualized increase but is slower than May’s 17.8% gain.

A closer look tells us that the increase in exports was led by shipments of cars and electronics, while imports were driven by increases in mineral fuels, machinery, and raw materials.

Japan’s exports to the U.S. rose for a fifth straight month in June, this time rising by 7.1% while imports from Uncle Sam jumped by 19.3% from a year earlier as demand for crude oil and coal increased.

Overall, the numbers point to strong external demand still fuelling Japan’s trade activities.

Australia’s jobs numbers

The Land Down Under made its own headlines today when it printed its employment numbers. See, the unemployment rate held steady at 5.6% in June as expected even as May’s 5.5% rate was revised higher to 5.6%.

It’s all good though. Details of the report tell us that the economy added a net of 14,000 jobs for the month, which is only slightly lower than the 15,000 figure expected. 62,000 full-time jobs were added while part-time employment decreased by 48,000.

For newbies out there, you should know that full-time jobs are preferable to part-time ones as job security encourages consumer spending.

Adding to the optimism is the labour force participation rate, which rose to a 17-month high of 65.0% from last month’s 64.9% figure. More workers are encouraged to find jobs with persons looking for full-time and part-time work increasing even as unemployment still ticked 13,000 higher for the month.

Unfortunately for the Aussie, traders focused on the revision to May’s unemployment rate and lower-than-expected net jobs added.

BOJ keeps policies steady in July

As expected, the Bank of Japan (BOJ) held its policies steady for another month in July. Kuroda and his gang will still implement a -0.1% interest rate; keep its other asset purchases steady, and shoot for “around zero percent” yields for 10-year JGBs.

A bit more interesting than the official statement is the outlook report, which shows the BOJ upgrading its economic outlook AND downgrading its inflation estimates.

Read GDP is now expected to grow by

  • 1.8% (from 1.6%) in 2017
  • 1.4% (from 1.3%) in 2018, and
  • steady at 0.7% in FY 2019.

Meanwhile, Japan’s core CPI forecasts were lowered to reflect a longer time to wait for inflation to hit the BOJ’s 2.0% target:

Core CPI is expected to rise by

  • 1.1% (from 1.4%) in 2017
  • 1.5% (from 1.7%) in 2018, and
  • 1.8% (from 1.9%) in 2019.

The BOJ had this to say about inflation:

“…A virtuous cycle between a moderate rise in the inflation rate and wage increases is likely to start operating gradually toward the end of the projection period — that is, toward fiscal 2019.

The timing of the year-on-year rate of change in the CPI reaching around 2 percent will likely be around fiscal 2019.

Not surprisingly, market players took the BOJ’s dovish remarks as a signal that it won’t join the hawkish bandwagon ever anytime soon.

Major Market Mover(s):

JPY

Yen traders shrugged off the relatively upbeat trade data from Japan in anticipation (with good reason) of a dovish BOJ economic outlook.

USD/JPY jumped by 33 pips (+0.30%) to 112.15, EUR/JPY is up by 26 pips (+0.20%) to 129.06, and GBP/JPY is up by 40 pips (+0.28%) to 146.00.

AUD

The Aussie took hits against its major counterparts as traders focused on headline misses in Australia’s jobs report.

AUD/USD is down by 27 pips (-0.34%) to .7929, AUD/JPY is down to 88.92 after spiking higher to 89.31, and AUD/NZD has levelled off to 1.0799 after hitting a high of 1.0846.

Watch Out For:

  • 6:00 am GMT: Switzerland’s trade balance (2.89B CHF expected, 3.40B EUR previous)
  • 6:30 am GMT: BOJ press conference
  • 8:00 am GMT: Euro Zone current account (23.3B EUR expected, 22.2B EUR previous)
  • 8:30 am GMT: U.K. retail sales report (0.4% expected, -1.2% previous)