US TSYS: Slightly Richer After Yesterday's Gains, Friday's Payrolls In Focus

• The range for gold continues to be narrow today at $4,040 - $4,069.
• Flows have been modest today with minor gains of +0.16% to US$4,058.
• Gold continues to trend near to the 20-day EMA of $4,073 looking for a catalyst.
• The near term outlook is for much of the same as the FED looks to cool inflation which in turn has reduced expectations for near-term rate cuts. This raises the opportunity cost of holding non-yielding gold. Investors are following suit with ETF inflows drying up as western investors shift capital toward high-yield fixed-income and tech-driven equities.
• The Korean central bank will buy locally produced gold, according to a Monday statement.  The Bank of Korea has created a cooperation framework with domestic gold producers, the Korea Exchange and the Korea Securities Depository to support the effort.  The move allows the central bank to diversify its gold procurement channels aside from current purchasing methods.

Fig 1:  Gold continues to trend near to 20-day EMA

source: Bloomberg Finance LP/ MNI 

The USD/JPY range today has been 1597.18-157.75 in the Asia-Pac session, it is currently trading around 157.65, +0.30%. The pair is looking to bounce off its support back toward the 155 area. Co-ordinated intervention with the US is not something you see very often so it again adds more two-way risk to this trade and a market that was very short Yen(Fig.1) can’t just shrug off an 800-900 point retracement without absorbing some pain. The issue is by not touching rates and there are some intimating this intervention could push the hike out further. The carry trade, though having to bear some punishment in the short-term, will continue to appeal to those looking to add risk and get paid for it. On the day, the strong support in the 155-157 area held at the first time of asking, through here and the 149-152 support comes back into play. Everyone will be watching to see if this support can hold and build a base from which to move higher again. Initial resistance is back toward 159-161 and I suspect we see sellers re-emerge around there initially.

• Alexander Stahel on X: “WSJ - Why Bessent Is Leaning on the Fed To Help Prop Up Japan’s Currency. “Washington’s stake in the yen runs through the Treasury. A sustained defense would mean Tokyo unloading them when 30-year Treasury yields have risen to its highest level since 2007.”
• Robin Brooks On X: “The Yen isn't falling because evil speculators are ganging up on Japan. It's falling because gov't bond yields are way below where they should be. This creates a steady outflow that one-off interventions can't fix. This is why intervention can't work.”
• CFTC Data up to 28/07/2026 shows Asset Managers adding back to their newly built short Yen position, -80 077(Last -77 443). The Leveraged community did the same adding to their own large core shorts, –124 575(Last -114 030).
• Options : Close significant option expiries for NY cut, based on DTCC data: 163.00($755m), 163.50($1.42b), 164.00($1.18b). Upcoming Close Strikes : 155.00($1.79b Aug 6), 162.00($2.92b Aug 6), 162.50($2.1b Aug 6) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 171 Points

Fig 1 : JPY CFTC Data

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

Fig 2 : USD/JPY Spot Daily Chart

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

The pace of outflows from Korea and Taiwan continue to dominate the overall flow story for Asia (ex Japan) equities.  The growing concerns as to the valuations of SK Hynix, Samsung and TSMC are now challenged since the launch of CXMT on the Shanghai exchange.  From its peak KOSPI is off now -32% whilst the TAIEX down -9.4% and within that SK Hynix is down -48% and TSMC -15%.  The outlook remains bleak for both in the near terms as the effects of leveraged ETFs in Korea continues to reverberate.  

Flows in the early stages of the week are poor with Korea losing $2bn in the first few days whilst Taiwan -$592m.  

India is a bright spot for now with inflows of $1bn in recent days with this week starting off with modest but positive gains.  

The YTD picture is bleak as outflows from the major markets tops $17.6bn.