JGBS: 30yr Yields Lower As Authorities Ask For Views On Longer Dated Supply

The Asia-Pac USD/JPY range has been 147.85 - 148.53, Asia is currently trading around 148.10, -0.25%. USD/JPY has drifted lower in sympathy to the SGD move after the MAS held policy unchanged. These headwinds were added too by headlines of a huge Earthquake just off the Russian coast that led to Tsunami warnings in the Pacific. First support seen back towards 146.00/147.00. A move back above the highs for July would turn the focus towards the pivotal 151.00/152.00 area.

• "Japan issued a tsunami warning after a powerful earthquake off the eastern coast of Russia on Wednesday morning local time. Tsunami warnings have been issued for Hawaii and parts of Alaska, and a tsunami watch is in force from the California-Mexico border to Chignik Bay, Alaska, according to the US National Weather Service’s Tsunami Warning System.” - BBG
• BOJ MNI BoJ Preview - July 2025: Focus On Presser After Trade Deal: The BoJ is widely expected to keep its policy rate unchanged at 0.5% for a fourth consecutive meeting, amid signs of easing trade-related uncertainty since its June meeting. Most analysts continue to expect the next rate hike to occur in late 2025 or January 2026. However, timing remains fluid.
• Markets will pay close attention to Governor Ueda's tone during the post-meeting press conference. Ueda has maintained a cautious stance since May, but if the forecasts and risk assessments are revised higher, there's a high likelihood his tone may shift.
• However, with OIS markets pricing in a 65% chance of a 25bp rate hike by end-2025, the bar for a hawkish surprise is high. As a result, even a mild shift in tone could be interpreted as dovish, relative to expectations.
• Options : Close significant option expiries for NY cut, based on DTCC data: 146.65($823m).Upcoming Close Strikes : 149.00($1.16b July 30), 147.00($1.52b Aug 1), 146.00($1.43b Aug 1) - BBG.

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

Gold prices are off their earlier low to be little changed in the APAC session. They fell to $3322/oz and are now around $3329.4, possibly supported by uncertainty created by tsunami warnings around the Pacific. Bullion has been in a narrow range though as markets wait for the FOMC decision later today (see MNI Fed Preview). Rates are widely forecast to be unchanged and so the tone will be monitored for any changes. Easing is expected for later in the year. US yields and the US dollar are also in a holding pattern.

• Gold will continue to watch US trade talk progress especially with South Korea and Brazil. US data over the rest of the week, especially Friday’s payrolls, could also drive price movements.
• Silver is up slightly at $38.234 after falling to $38.011.
• Equities are mixed with the S&P e-mini up 0.1% & KOSPI +1.2% but Hang Seng down 0.4% and Straits Times -0.4%. Oil prices are moderately higher after rising strongly on Mon/Tues. WTI is +0.1% to $69.29/bbl. Copper is up 0.7%.
• Not only is the Fed decision announced later today but advanced US Q2 GDP and July ADP employment print. Preliminary Q2 euro area GDP, July EC survey, Spanish July CPI, German June retail sales are also released. Data on both sides of the Atlantic will be watched for signs of any tariff impact. BoC also announces but is also expected to be on hold.

The AUD/USD has had a range of 0.6503 - 0.6529 in the Asia- Pac session, it is currently trading around 0.6510, +0.02%. The pair moved lower after the Q2 CPI print but found demand back towards the 0.6500 area and could not follow through. First support seen around 0.6450 then the more important 0.6350 area. The market's focus will now turn to the FOMC tomorrow morning.

• AUSTRALIA DATA: Core Inflation Moderating Towards Band Mid-Point. Australia’s Q2 trimmed mean CPI printed only 0.1pp above the RBA’s May Q2 forecast, which with the economy developing broadly in line with expectations since the July meeting should allow it to ease 25bp on August 12 when it also releases its updated outlook. Trimmed mean rose 0.6% q/q to be up 2.7% y/y, a moderation from Q1’s 0.7% & 2.9%.
• RBA: VIEW: Westpac Expects Cuts At Next Four SoMP Meetings. Westpac believes two consecutive prints at seasonally-adjusted 0.6-0.7% q/q show that underlying inflation is within the band and so the RBA can continue easing in August. It believes that will be followed by 25bp cuts in November, February and May – all Statement on Monetary Policy meetings that include updated staff forecasts.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6500(AUD469m), 0.6550(AUD1.01b), 0.6600(AUD923m). Upcoming Close Strikes : 0.6600(AUD1.38b July 31), 0.6465(AUD1.01b July31), 0.6465(AUD1.01b Aug 4) - BBG
• CFTC Data shows Asset managers added a decent clip to their shorts -53959(Last -38267), the Leveraged community reduced their own shorts to -12010(Last -20048).
• AUD/JPY - Asia-Pac range 96.31 - 96.75, Asia is trading around 96.45. The pair could not hold above 97.00 on Monday and consolidated overnight. The support between 95.00 - 96.00 held very well last week and the pair is looking to regain its momentum for a move higher. The event-risk coming up this week though could provide some short-term headwinds.

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P