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Japan printed tons of economic data today, but the franc saw the most volatility. What’s up with that?!

  • U.K. GfK consumer confidence down to -12 from -10 vs. -11 expected
  • Japan’s household spending up by 2.3% vs. 0.6% expected, 0.1% dip in May
  • Japan’s unemployment rate drops to 2.8% vs. 3.0% expected, 3.1% in May
  • Japan’s retail sales (y/y) remains at 2.1% vs. 2.3% growth expected
  • Japan’s national core CPI (y/y) retains 0.4% growth in June
  • Tokyo’s core CPI (y/y) up by 0.2% vs. 0.1% expected, 0.0% previous
  • AU PPI (q/q) retains 0.5% growth vs. 0.6% uptick expected in Q2 2017

Major Events/Reports:

Japan’s data dump

Data from the world’s third largest economy saw its jobless rate dropping from 3.1% to 2.8% in June. And if that’s not good enough news, job availability also hit a 43-year high with job-to-applicants ratio rising from 1.49 to 1.51.

On a related note, consumer spending rose by 2.3% from a year earlier in June when market analysts had expected a 0.6% uptick. Not only did the report break the 15-month streak of declines, but it also marks the fastest gain since August 2015. Wowza!

For many analysts, the report underscored the importance of job availability that can push wages and consumer spending higher.

Meanwhile, retail sales grew by 2.1% from a year earlier in June, which lines up with May’s growth and missed analyst expectations of a 2.3% uptick. Compared to last month, retail sales increased by 0.2% and marked the eight consecutive month of improvement.

Keeping the yen bulls in check is the all-important inflation reports, which retained its subdued conditions.

Core consumer prices only rose by 0.4% from a year earlier in June, which is waaaay lower than the BOJ’s 2.0% goal.

If you recall, the BOJ recently downgraded its inflation forecasts, which now reflect inflation hitting its goal some time after Half-Life 3 is released. Tokyo’s core CPI provided a silver lining, though, as it gained 0.2% after last month’s 0.0% reading.

Franc’s unexpected spike higher

Asian session traders were taken aback when, despite the lack of catalysts, the franc shot lower across the board.

Market bees had already been buzzing about interest from both the SNB and large hedge funds so that might have something to do with the move. Of course, it also doesn’t hurt that more and more analysts had been talking about the monetary policy divergence between the SNB and ECB’s biases. For now, traders seem happy to blame the moves on the (usual?) catalyst – algos.

In any case, the franc sank to its weakest against the euro since January 2015 when the SNB unexpectedly removed its 1.2000 currency peg. Quick, someone check the major brokers to see if they’re still liquid!

Major Market Mover(s):

CHF

The Swiss franc popped lower against its major counterparts despite a lack of catalysts. Currency bulls were quick to pounce, though, and have already pushed it back up to erase almost half of the strong moves.

EUR/CHF is up by 65 pips (+0.58%) to 1.1328 after spiking to 1.1362,
USD/CHF is up by 48 pips (+0.50%) to .9695 after hitting a high of .9723,
GBP/CHF is up by 78 pips (+0.62%) to 1.2680 after rising to 1.2717, and
CHF/JPY hit a low of 114.22 before finishing 64 pips (-0.56%) lower at 114.62.

USD

The Greenback edged even lower against most of its counterparts as uncertainty over the “skinny” Obamacare vote in the Senate kept dollar bulls from taking advantage of the overall risk aversion in the markets.

EUR/USD is up by 7 pips (+0.06%) to 1.1684
USD/JPY is down by 6 pips (-0.05%) to 111.13, and
GBP/USD is up by 17 pips (+0.13%) to 1.3080.

Watch Out For:

  • 5:30 am GMT: France’s flash GDP (q/q) expected to remain at 0.5%
  • 6:45 am GMT: France’s consumer spending (-0.3% expected, 1.0% previous)
  • 7:00 am GMT: Switzerland’s KOF economic barometer (105.9 expected, 105.5 previous)
  • 7:00 am GMT: Spain’s flash CPI (y/y) expected to remain at 1.5%
  • 7:00 am GMT: Spain’s flash GDP (0.9% expected, 0.8% previous)
  • German preliminary CPI expected to remain at 0.2%
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