[MARKET ANALYSIS] Mixed performance across G10s, USD flat; JPY leads after BoJ sources, Kiwi lags after soft inflation expectations
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Indian Trade Ministry says they are actively in talks with the US on pending trade issues
Turkey says it will be forming a strategic, political and military mechanism for an alliance with Saudi Arabia and Pakistan
[MARKET ANALYSIS] Mixed performance across G10s, USD flat; JPY leads after BoJ sources, Kiwi lags after soft inflation expectations
SK Group (034730 KS) chairman says "memory chips prices went up too fast" and that he hopes all this buildout will help", CNBC reports
[MARKETANALYSIS] Crude subdued as geopolitical headlines quieten down, whilst metals give back yesterday’s gains
On the Newsquawk feed at , 20 minutes before this page.
- USD stabilises just below 100.00 after gains on Wednesday despite US CPI triggering a small dovish repricing. ING opines the USD strength seen after the data is likely a function of traders rebuilding longs as the set of July data comes to a close ahead of PPI today. Another potential factor could be this week's quiet markets, which could have triggered some carry demand, especially as the recent data do not imply a clear Fed policy direction. Today, DXY is flat within a narrow 99.91-100.08 range after facing resistance at 100.05.
- JPY saw some strength after Bloomberg sources indicated the Takaichi government is said to support a faster BoJ rate hike. A report which has convinced markets, with interest rate futures now implying a 75% probability of BoJ tightening in September. This could be added to should these remarks come from Takaichi herself. USD/JPY fell c. 30 pips to a 159.18 base, before paring some of the move, now sitting around 159.40.
- NOK saw some weakness as while the Norges Bank left rates unchanged and keeping the door open to further tightening, it signalled inflation progress in the statement. If this progress is reflected in September's statement, it could imply a removal of the tightening bias and as such has led to the trimming of NOK longs. Despite this, the bank remains slated to hike in September, a view held by Nordea and SEB. EUR/NOK was choppy on the announcement, initially falling 0.2% to a 10.90 base, before reversing the move to a peak just above 10.97.
- NZD is the G10 laggard after soft one year and two year inflation expectations. Kiwi saw pressure throughout the APAC session, rebounding slightly now after surpassing the 100 and 200 DMAs in NZD/USD, reaching a 0.5820 trough.
Context
Sessions of this kind, a flat dollar index parked at a round number while idiosyncratic G10 stories do the work, tend to occur in the lull between major US releases, when positioning flows and carry dominate over macro signal. The more durable thread is the JPY leg: sourced reports that a government favours faster normalisation have historically mattered only insofar as they lower the political cost for the central bank, since administrations have more often leaned against hikes than for them, and the tell is whether the official named puts her own name to the view rather than leaving it with sources. Futures-implied probabilities of the sort cited here have a record of overpricing single-meeting moves and fading once the source story goes unconfirmed. On the NOK side, a hold with an intact hiking bias but softer inflation language fits the familiar pattern of a small central bank teeing up the removal of its bias one meeting ahead of the act, which is why longs get trimmed even when the path is unchanged; the next statement is the event that resolves it. Inflation-expectations surveys moving the antipodean currency is the standard transmission for a bank whose reaction function weights them heavily, and breaks of clustered moving averages in thin APAC trade have tended to invite follow-through only if the home session ratifies the move. Into the US producer price print, the pattern of carry demand in quiet weeks argues for range trading in the dollar rather than trend, unless the data break the stalemate.
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