JPY: Asia Wrap - USD/JPY Consolidates On A 147 Handle Heading Into US CPI
The USD/JPY range has been 147.28-147.48 in the Asia-Pac session, it is currently trading around 147.45, +0.01%. USD/JPY traded sideways overnight caught between a heavy USD and its own political upheaval. The price remains in the middle of its recent 146-149 range, with US CPI to potentially test that tonight. CFTC data shows leveraged funds again added a decent clip to their short JPY position last week so they will be hoping the inflation data tonight keeps this support intact. A move back below 145/146 is needed to potentially start seeing these positions being flushed out.
- MNI Brief: Japan Aug CGPI Rises 2.7% Y/Y; Import Price Drops. Japan’s corporate goods price index rose 2.7% y/y in August, accelerating from July’s revised 2.5%, driven by beverages and foods(+5.0% vs +4.7%) and nonferrous metals(+6.2% vs +0.3%).
- Japan automakers continued to slash US export prices, with automobiles down 19.9% y/y on a yen basis and 20.5% on a contract currency basis, pointing to squeezed profit margins.
- Local Investors Buy Offshore Equities & Bonds : We saw a second consecutive week of net buying in the offshore bond space, albeit at a more modest pace compared to the previous week. This is consistent with rising global bond returns, aided by rising Fed easing expectations amid softer data outcomes. Local investors also purchased offshore equities for the second straight week and in bigger size compared to the prior week. Again, similar factors may be in play, with global equity returns on the improve in recent weeks.
- Options : Close significant option expiries for NY cut, based on DTCC data: 145.75($1.09b), 147.50($896m), 150.00($1.11b).Upcoming Close Strikes : 147.40($1.46b Sept 12), 150.00($1.49b Sept 16) - BBG.
- CFTC data shows last week asset managers again added to their JPY longs after a consistent period of reduction +78427( Last +76761), leveraged funds though again used the dip to add a decent clip to their newly built short JPY position -66914(Last -52275). One of them is going to be wrong.
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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- MNI: RBA LOWERS CASH RATE 25BP TO 3.6%
ASIA STOCKS: Japan markets Outperform, Aided By Earnings
In the equity space, the major indices are mostly in the green at this stage. Japan benchmarks are the standout, while gains are more modest elsewhere. US Equity futures are a touch higher, after modest cash losses in Monday US trade. The focus is on the US CPI print later. A decent upside surprise is likely needed to derail a Fed cut in September.
- For Japan markets, the Topix is up a further +1.7%, while the NKY 225 is around +2.7%, trading at fresh record highs. Cited catalysts have been tariff related relief (that Japan avoided a worse case scenario), while better earnings in the tech space are another positive. The Topix information and communication sub index is up around 2.7% at this stage. Markets were also out yesterday, so some catch up may be in play.
- In China and Hong Kong markets are higher, although more so for China. The CSI 300 is up around 0.6%, while the HSI is just in positive territory. There has been some drag from the HSI tech sub index.
- The Taiex is up a touch, while the South Korean Kospi is close to flat. The Kospi was up in early trade, but the South Korean Presidential Office denied earlier onshore media reports around a potentially favorably stock capital gains tax ruling.
- In South East Asia, Indonesian stocks are up strongly, last +1.3%. Thailand and Singapore are down modestly.
- In Australia, the ASX 200 is close to flat as markets await the RBA decision in a few minutes. The central bank is widely expected to cut rates by 25 bps.
