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Asian session market players got busy buying higher-yielding assets after China announced a possible (positive) development in the U.S.-China trade war.

  • Japan’s trade balance shows 0.05T JPY deficit vs. 0.02T JPY surplus expected in July
  • Australia’s MI inflation expectations shoots up from 3.9% to 4.0%
  • Australia’s unemployment rate slips from 5.4% to 5.3% in July
  • Australia sees net decrease of 3,900 jobs vs. +15,000 expected, +58,200 previous

Major Events/Reports:

Australia’s jobs numbers

A report from the Land Down Under showed a net of 3,900 workers LOSING jobs for the month of July. For reference, analysts had expected a 15,000 uptick after June’s 58,200 increase.

It wasn’t all gloom and doom, however. For one thing, the unemployment rate dipped from 5.4% to 5.3%, its lowest rate since November 2012. Monthly hours worked also improved by 0.2% to 1,749.6 million hours.

A closer look also tells us that part-time employment fell by 23,200 while a net of 19,300 workers had found full-time jobs.

Similarly, those who are looking for part-time jobs dropped by 8,000 while those who are looking for full-time work shot up by 2,300.

The huge decline in part-time job seekers is probably why the labor market participation rate fell by 0.1% to 65.5% when analysts saw it at 65.7% for the month.

Overall, the shift to full-time employment (and therefore steadier income) is a good turnaround for the Reserve Bank of Australia (RBA), which had been worrying over underemployment and increasing household debt.

Japan’s trade data

The world’s third largest economy surprisingly recorded a trade deficit for the month of July.

Japan recorded a 231.2B JPY deficit, much weaker than the 20.7B JPY surplus expected and the 720.8B JPY figure we saw in June.

Apparently, exports increased by 3.9% from a year earlier, which was not enough to offset the 14.6% annualized surge in imports. For reference, back in June exports had gone up by 6.7% while imports only saw a 2.5% uptick.

Interestingly, Japan’s politically-sensitive surplus with the U.S. shrank by 5.2% from a year earlier while exports to China shot up by 11.9%.

U.S. and China to hold fresh round of trade meetings

The biggest story of the hour is a potential progress on the U.S.-China trade war.

China’s Ministry of Commerce announced that a delegation led by the Vice Minister of Commerce Wang Shouwen will meet with U.S. representatives led by Under Secretary of Treasury for International Affairs David Malpass in Washington later this month.

It’s still unclear whether the talks will happen before the U.S. is scheduled to implement additional tariffs on an additional $16 billion worth of Chinese goods. If you recall, China had threatened to retaliate in kind.

The announcement was enough to boost higher-yielding bets in the Asian markets, but some traders remained skeptical. After all, the higher-level meetings that happened in May were touted as a success, but eventually led to the two economic giants dropping more tariffs on each other’s products.

And then there are lingering concerns over Turkey’s economy. While it’s not as large as other economic superpowers, contagion fears as well as the possibility of Turkey siding with U.S. competitors and increasing geopolitical tensions kept some investors in the sidelines.

  • Nikkei is down by 0.20% to 22,159.7
  • A SX 200 is up by 0.64% to 6,238.1
  • Shanghai index is down by 0.87% to 2,699.603
  • Hang Seng is down by 0.61% to $27,155.7

Commodity prices also showed mixed prices, with the safe-haven gold falling on overall risk appetite while crude oil prices recovered from their intraday lows after China’s announcement.

  • Gold is down by 0.23% to $1,172.02
  • Brent crude oil is up by 0.23% to $70.95
  • U.S. WTI is up by 0.22% to $64.99.

Major Market Mover(s):

AUD

Aussie bulls shrugged off Australia’s mixed labor market numbers in favor of pricing in China and the U.S. resuming their trade negotiations.

AUD/USD is up by 31 pips (+0.42%) to .7269; AUD/JPY is up by 39 pips (+0.48%) to 80.55; AUD/NZD is up by 19 pips (+0.17%) to 1.1042; EUR/AUD is down by 9 pips (-0.06%) to 1.5661, and GBP/AUD is down by 34 pips (-0.19%) to 1.7502.

EUR

There were no catalysts for the euro’s gains, though profit-taking after this week’s strong moves and a bit of easing of Turkey-related contagion fears might have boosted the common currency higher.

EUR/USD is up by 40 pips (+0.35%) to 1.1385; EUR/GBP is up by 12 pips (+0.14%) to .8948; EUR/CAD is up by 34 pips (+0.23%) to 1.4942, and EUR/NZD Is up by 15 pips (+0.09%) to 1.7294.

JPY and CHF

A risk-friendly trading environment took its toll on lower-yielding bets like the yen and franc.

USD/JPY is up by 7 pips (+0.06%) to 110.81; EUR/JPY is up by 51 pips (+0.41%) to 126.16; GBP/JPY is up by 41 pips (+0.29%) to 140.98, and NZD/JPY is up by 24 pips (+0.34%) to 72.94.

USD/CHF is up by 10 pips (+0.10%) to .9925; EUR/CHF is up by 28 pips (+0.25%) to 1.1300; GBP/CHF is up by 15 pips (+0.11%) to 1.2628; AUD/CHF is up by 23 pips (+0.32%) to .7215, and CHF/JPY is up by 19 pips (+0.17%) to 111.64.

Watch Out For:

  • 6:00 am GMT: Germany’s wholesale price index to remain at 0.5%?
  • 8:30 am GMT: U.K.’s retail sales (0.2% expected, -0.5% previous)
  • 9:00 am GMT: Euro Zone’s trade balance (17.0B EUR expected, 16.9B EUR previous)