ASIA STOCKS: Japan Firmer On US Trade News, Mixed Trends Elsewhere
Asian equity market trends are mixed as we approach the end of the week. The stand out performer has been Japan stocks, aiding by US-Japan trade talks, which appeared to clarify tariff stacking concerns favorably for Japan. trends elsewhere have been mixed. US equity futures are modestly higher, with Eminis and Nasdaq futures both a little over 0.20% firmer at this stage. Trends are positive for these indices, but we remain off late July highs.
- The Topix is up around 1.5%, the NKY 225 up around 2.2%. For the Topix we are consolidating the recent break above 3000, and tracking at fresh record highs. The NKY 225 is just short of fresh highs. Sentiment has been aided by earlier headlines around US-Japan trade talks, which appeared to clarify the issue around stacking tariffs. Japan's top trade negotiator, Ryosei Akazawa, stated the US will end tariff stacking and cut car tariffs at the same time. There wasn't a timeline on when this would take place, but it is not expected to stretch beyond 6 months.
- Elsewhere we had weaker than forecast Japan real household spending for June. The BoJ Summary Of Opinions recognized inflation risk but exiting the current wait and see approach may not happen until the end of this year.
- Trends are mixed elsewhere, with the HSI off around 0.65% in Hong Kong, while the CSI 300 is little changed, last near the 4117 level.
- The Kospi is also weaker, but still above 3200, while Taiwan's Taiex is around flat. This comes after yesterday's strong outperformance as TSMC rallied to record highs on views the company will avoid the US's 100% chip tariff. Offshore investor inflows were also very strong.
- In South East Asia, trends are relative steady outside of Singapore stocks, which are down around 0.50%. Indonesian markets have performed better, up close to 0.80% at this stage.
- Indian markets remain under pressure, with the benchmark Nifty and Sensex indices both down around 0.40% at this stage. We are up from recent lows, but the downtrend looks firmly entrenched at this stage, amid heightened US tariff risks.
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GOLD: Gold Steadies, Looking for Next Catalyst
- After strong falls overnight, Gold has steadied in the Asia trading day modestly lower.
- Gold opened the day at US$3,302.51 and is down -0.20% at $3,295.36.
- Last night's falls saw gold trend below major moving averages and today's weakness sees gold below the 50-day EMA of $3,299.39.
source: Bloomberg Finance LP / MNI
- Below is the 100-day EMA of $3,191.92.
- Brazil's exchange B3 SA is launching a new gold futures contract that will begin trading on July 21 amid a more than 25% year-to-date increase in the commodity that led it to a record high on April.
JPY: Asia Wrap - USD/JPY Continues To Challenge JPY Longs
The Asia-Pac USD/JPY range has been 146.53 - 147.18, Asia is currently trading around 147.10, +0.35% having found decent demand and staying better bid throughout our session. USD/JPY price action is telling as it marches relentlessly higher, challenging a market positioned the wrong way. Price is now pushing towards the upper boundary of its 142.00 - 148.00 range, the pair will probably continue to take its cue from the US rates market which is also approaching some key pivot areas.
- (Bloomberg) - As the dollar recovers from an extended slump, its Japanese counterpart is falling out of favor among traders. One-week dollar-yen risk reversals -- which gauge the premium traders are willing to pay for call versus put options -- now trade at some 37 basis points in favor of Japan’s currency. That’s the least bullish level since October, and reflects growing jitters over Japan’s spending outlook ahead of the key upper house election later this month.”
- (Bloomberg) - “Junko Koeda, one of the BOJ’s newest board members, signaled a possible upward revision to the central bank’s inflation view this month. Such a move would keep open the possibility of another rate hike this year.”
- USD/JPY has lost all downside momentum for now and is back in its wider 142.00 - 148.00 range. The Market is long JPY and should the USD manage to continue to correct higher the risk is a move back to the top end of the range to further challenge the conviction of the shorts.
- Options : Close significant option expiries for NY cut, based on DTCC data: 144.50($860m).Upcoming Close Strikes : none.
- CFTC data shows Asset managers increased their JPY longs slightly +94753, while leveraged funds maintained their longs they have tried to rebuild +15798.
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUD: Asia Wrap - AUD/USD Trades Sideways Above 0.6500, AUD/JPY Breaking ?
The AUD/USD has had a range of 0.6510 - 0.6537 in the Asia- Pac session, it is currently trading around 0.6530, -0.03%. The pair has traded sideways in a tight range today as it consolidates the reaction to the RBA yesterday. The AUD needs to hold above its 0.6480/0.6500 support as a sustained move below there would see a deeper correction back to 0.6350/0.6400.
- MNI RBA Review - July 2025: Easing Bias Still Intact: The RBA surprised the market by keeping rates on hold at 3.85%. The central bank wants to see more evidence of inflation sustainably trending towards the 2-3% target before easing more.
- RBA Governor Bullock stated the central bank still has an easing bias, and the split vote decision (6 in favor of the hold, 3 in favor or a cut) reflected the timing of further easing rather than the direction of rates.
- AUSSIE BONDS ACGB Dec-35 Supply Digested But Less Demand: Expectations of sustained strong pricing at auctions proved accurate, with the latest round of ACGB Dec-35 supply seeing the weighted average yield print 0.58bp through prevailing mids (per Yieldbroker). Today's cover ratio fell to 2.6500x from 3.1042x.
- The AUD/USD bounced strongly off its support around 0.6500 overnight, looks like it's back to the 0.6500 - 0.6600 range and it should now take its cues from the USD. Watching to see if the support continues to hold as a move through there signals a deeper correction.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6425(AUD700m), 0.6550(AUD 607m). Upcoming Close Strikes : 0.6650(AUD857m July 10), 0.6600(AUD634m July 10), 0.6650(AUD599m July 11)
- CFTC Data shows Asset managers pared back their shorts slightly -35992, the Leveraged community maintained their shorts -22903..
- AUD/JPY - Today's range 95.62 - 96.05, it is trading currently around 96.04, +0.34%. The pair is attempting to break above 96.00, with the market positioned both short AUD and long JPY. A sustained break above this level could see another tranche of these shorts pared back and provide a tailwind to probe higher.
Fig 1: AUD/JPY spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
