ForexLive Asia-Pacific FX news wrap: USD/JPY dropped to 155.50, recovered

• Federal Reserve speakers on Thursday include Logan, Daly, Bowman
• Canada – Trudeau holds meeting with Mark Carney to join government
• Chinese Communist Party news conference called for July 19 – Third Plenum briefing
• Bank of England speaker Thursday on financial stability
• Australian data: Q2 business survey shows conditions eased and forward indicators softened
• Australian June unemployment rate 4.1% (vs. 4.0% expected)
• PBOC sets USD/ CNY central rate at 7.1285 (vs. estimate at 7.2587)
• Former Bank of Japan Exec Director says Bank of Japan unlikely to raise rates this month
• Some USD/JPY option expiries to be aware of for 10am NY time today
• Japan data – June exports +5.4% y/y (expected 6.4%) & imports +3.2% y/y (expected 9.3%)
• European Central Bank monetary policy decision due today – on hold widely expected
• Bank of America’s global fund manager survey – most expect first Fed rate cut in September
• US President Biden has Covid
• JP Morgan on oil – wary of diminished incentivization driving a spike to US $100 / barrel
• Goldman Sachs – Global hedge funds reducing exposure to US stocks for 5 days in a row
• ICYMI – Fed’s Beige Book eyes growth slowing, consumers tightening belts
• UBS expect the Federal Reserve to cut in September, say get into attractive yield now
• Forexlive Americas FX news wrap: Nasdaq suffers worst drop since 2022. USD/JPY pressured
• Trade ideas thread – Thursday, 18 July, insightful charts, technical analysis, ideas

USD/JPY
was sold off in the Tokyo morning to lows under 155.50. There were no
fresh obvious catalysts to trigger the moves, although we did have
trade data for June published (not generally a market-mover). The
drop was attributed to an underlying fear of further Bank of Japan
intervention, the potential for a rate hike at the July meeting or at
least larger trimming of bond buys than is expected, and a run on
stops under the round number 156.00. There was some talk of
intervention but volumes remained light, arguing against
intervention. I also noted that an intervention effort would seem to
be not the way the BOJ is operating right now:

• the
  BoJ recently slammed yen crosses after US data, at a time when
  USD/JPY was already falling
• the
  BoJ tends not to intervene in times of deep and thick liquidity, like
  with Tokyo markets fully operating

From
Australia today we had the latest employment report. It was another
solid report, jobs added were more than double the central estimate.
The unemployment rate ticked up by 0.1%, with an increase in
participation also. The jobless rate remains not too far from
five-decade lows. AUD/USD popped a few points higher after the data
and managed to sustain the small rise as I post.

Apart
from the yen major FX was subdued.

This article was written by Eamonn Sheridan at www.forexlive.com.