GOLD: Gold Backs off from All Time Highs

The Asia-Pac USD/JPY range has been 146.62 - 147.26, Asia is currently trading around 147.20, +0.05%. USD/JPY was capped by decent supply around 148.00 overnight and traded heavy into our open ignoring the big bounce in US Equities. Price has moved very quickly away from the pivotal 151/152 area much to the relief of Institutional JPY longs and the BOJ. CFTC Data shows leveraged accounts had started to aggressively build Yen shorts last week so this quick move lower would be a bitter pill to swallow. Price is tested the first support area around 146.50/147.00 where it found good demand this morning, a move sub 145.00 is needed to turn momentum lower once more, until then the 145.00-151-00 range should dominate.

• "AKAZAWA: WILL MULL COLLABORATION WITH US ON PHARMA SUPPLY, WILL WORK CLOSELY WITH US ON CHIP MANUFACTURING. CHIP, PHARMA ARE IMPORTANT FOR ECONOMIC SECURITY. WILL ALSO AIM TO BOOST INWARD DIRECT INVESTMENT" - BBG - BBG
• "ISHIBA: BELIEVE TRADE DEAL DAMAGE TO AUTO INDUSTRY MINIMAL, DEAL IS WIN-WIN BASED ON JAPAN'S TECH, US LABOR AND MKT.  LIMITING IMPACT OF TRADE DEAL ON JAPAN FARMERS CRITICAL, TRADE DEAL DOESN'T AFFECT JAPAN'S RICE FARMERS" - BBG
• Bloomberg - “MUFG CEO Hironori Kamezawa called on the BOJ to raise its policy rate as early as the next meeting to combat strong inflation.”
• “Japan is set to shift its policy on rice to focus on boosting production, moving away from adjusting output to maintain price stability, Nikkei reported.” - BBG
• Options : Close significant option expiries for NY cut, based on DTCC data: 144.00($1.13b).Upcoming Close Strikes : 147.00($1.31b Aug 6), 148.50($1.24b Aug 7) - BBG.
• CFTC data shows asset managers surprisingly added slightly to their JPY longs +75119( Last +72326), while leveraged funds aggressively added to their newly built short JPY position -31280(Last -11571).

Fig 1 : USD/JPY Spot 120min Chart

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

The AUD/USD has had a range of 0.6454 - 0.6480 in the Asia- Pac session, it is currently trading around 0.6455, -0.17%. The AUD has traded heavy for most of our session even with risk trading positively. The AUD bounced nicely off the 0.6400 area but I suspect sellers might return back towards 0.6500/50 initially, though the bounce in equities overnight might suggest the correction I was looking for might not be as imminent as first thought. 

• AUSTRALIA DATA: Q2 Spending Volumes Suggest Slight Pickup In Consumption Growth. June household spending printed lower than expected at 0.5% m/m bringing the annual rate to 4.8% up from May’s 4.4% though. Q2 consumption volumes rose 0.7% q/q, third consecutive gain, up from Q1’s 0.5% signalling that private spending in the national accounts on September 3 could be slightly higher than Q1’s 0.4%. This is an area that has disappointed RBA expectations given the growth in real incomes and it is monitoring closely.
• "The ANZ-Roy Morgan Australian consumer confidence rose 3.9 points to 90.6 points in the week of July 28 to Aug. 3, its highest since May 2022, driven by an increase across all the subindices, ANZ reported Tuesday." - MTN
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6550(AUD831m), 0.6600(AUD847m). Upcoming Close Strikes : 0.6500(AUD4.16b Aug 8), 0.6600(AUD1.97b Aug 7), 0.6800(AUD1.72b Aug 7) - BBG
• CFTC Data shows Asset managers reduced their shorts slightly -49183(Last -53959), the Leveraged community added to their own shorts -13997(Last -12010).
• AUD/JPY - Asia-Pac range 94.95 - 95.29, Asia is trading around 95.00. The pair failed on multiple attempts above 97.00 and has moved swiftly back to test its first support toward the 95.00 area. Like the rest of the crosses the price action stands out in that it has not benefited at all from the strong bounce in risk overnight. There should be sellers around the 96.00/96.50 area initially.

Fig 1: AUD/USD spot Daily Chart

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

The TYU5 range has been 112-10 to 112-15+ during the Asia-Pacific session. It last changed hands at 112-11, down 0-01 from the previous close. 

• The US 2-year yield has edged higher trading around 3.696%, up 0.02 from its close.
• The US 10-year yield has moved higher trading around 4.20%, up 0.01 from its close.
• US TSY FLOWS BLOCK: 4000 of FVU5 traded at 109-03+. The contract is currently trading at 109-03, -0-01+ from closing levels.
• The 10-year yield had a powerful move lower in reaction to the NFP data, breaking below its 4.30% pivot within the wider range 4.10% - 4.65%. This now turns momentum lower in yields and you could expect buyers of treasuries on bounces back towards 4.30/35% now looking to initially test the 4.10% area. 
• Bloomberg - “The Fed may need more than two rate cuts this year, Mary Daly told Reuters. “I was willing to wait another cycle, but I can’t wait forever,” she said.”
• “The rally in US government debt was muted, as investors braced for heavy supply this week of $125 billion in new three-, 10- and 30-year bonds. ” - BBG
• David Rosenberg on X: “The virtual stalling-out in payroll growth in the past three months has been a recession predictor with 100% accuracy over the past six decades. Score a win for Bowman and Waller, whose crystal balls are clearer than the rest of the FOMC pack.”
• Data/Events: Trade Balance, S&P Global PMI’s, ISM Services

Fig 1: 10-Year US Yield 120min Chart

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