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While exports did not jump by as much as expected they grew much faster than in June.

Imports beat.

Exports to:

• China +7.2% y/y
• the EU -5.3% y/y
• the US +7.3% y/y

USD/JPY dropped to under 145.00 earlier and is sitting around 145.27 in Tokyo morning trade.

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

Justin and I will be in Sydney next week for the
Finance Magnates Pacific Summit.

Its happening Tuesday 27 August to Thursday 29 August!

Both of us were lucky enough to get to speak with Louise Bedford from Talking Trading about the summit. Louise will be there too, and her presentation alone will be worth coming for!

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

A note from JP Morgan argues that the recent volatility spike has dealt a major blow to the FX carry trade, which had been the dominant FX strategy over the past 12-18 months.

JPM point to unwinding of carry trades, first triggered by the MXN sell-off post-elections and then accelerated by the sharp JPY rally, having erased year-to-date carry returns. Estimates suggest 65-75% of carry positions have been unwound.

Looking ahead JPM argue that it is unlikely that carry trading will regain its previous prominence for a few key reasons:

1. Carry dispersion is expected to continue narrowing, amplified by the Fed’s accelerated easing cycle and similar moves from EM central banks. This reduces the carry reward.
2. The higher volatility environment, upcoming US election risk, and signs of a broader economic slowdown make the macro backdrop less conducive to the pro-cyclical carry strategy.

In contrast, valuation and rates-momentum strategies have recently outperformed the carry trade.

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Break up song:

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

Dr Hans Kluge from the World Health Organization says that Mpox is “not the new Covid”, because authorities clearly know how to control its spread.

The BBC has the report if you want to read it.

It adds:

• There is still a lot to learn about the new variant, experts say, but it may be spreading more easily, causing more serious disease.

While Kluge sounds confidence … is such confidence misplaced?

I don’t know. But I do know a thing or two about assessing degrees of confidence.

Stay alert on this. Its not as if we haven’t had recent experience of health concerns spiralling worse than expected. Hopefully its nothing.

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

Via Bloomberg overnight was the report on moves to further prop up, or try to, China’s troubled property sector.

While Bloomberg is gated, the basic gist is that China is considering a new strategy to support its struggling real estate market by allowing local governments to use special bonds to purchase unsold homes.

• Such bonds are typically reserved for projects like infrastructure and environmental initiatives.
• Local governments have already used over half of this year’s 3.9 trillion yuan ($546 billion) bond quota, and it’s uncertain how much of the remaining funds might be redirected toward buying homes if this plan is approved.

This proposal highlights the increasing urgency among Chinese policymakers to address the ongoing real estate crisis. However, it may face similar challenges as previous rescue efforts, which have seen limited success. For instance, only about 8% of the 580 billion yuan from existing rescue funds has been utilized, partly due to the low returns from converting unsold homes into affordable housing.

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

The numbers via oilprice.com on Twitter:

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Expectations I had seen centred on:

• Headline crude -2.7 mn barrels
• Distillates -0.2 mn bbls
• Gasoline -0.9 mn

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This data point is from a privately-conducted survey by the American Petroleum Institute (API).

• It’s a survey of oil storage facilities and companies
• The official report is due Wednesday morning US time.

The two reports are quite different.The official government data comes from the US Energy Information Administration (EIA)

• Its based on data from the Department of Energy and other government agencies
• Whereas information on total crude oil storage levels and variations from the previous week’s levels are both provided by the API report, the EIA report also provides statistics on inputs and outputs from refineries, as well as other significant indicators of the status of the oil market, and storage levels for various grades of crude oil, such as light, medium, and heavy.
• the EIA report is held to be more accurate and comprehensive than the survey from the API

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

There is not much here to shift around FX too much. I expect the swinging yen to keep on … swinging. It doesn’t need outside catalysts right now.

This snapshot from the ForexLive economic data calendar, access it here.

The times in the left-most column are GMT.

The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.

I’ve noted data for New Zealand and Australia with text as the similarity of the little flags can sometimes be confusing.

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

Good morning, afternoon and evening all. Any charts, technical analysis, trade ideas, thoughts, views, ForexLive traders would like to share and discuss with fellow ForexLive traders, please do so:

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

• Canada July CPI 2.5% versus 2.5% expected
• Fed’s Bowman: Some recent further progress on lowering inflation. Remain cautious on cuts
• US job seekers rise to highest since 2014 in NY Fed survey
• Philly Fed non-manufacturing employment index falls to the lowest since the pandemic
• New Zealand GDT price index +5.5%
• Canada July new housing price index +0.2% vs -0.2% prior

Markets:

• Gold up $10 to $2513
• US 10-year yields down 5.3 bps to 3.81%
• WTI crude oil down 55-cents to $74.04
• S&P 500 down 0.2%
• JPY leads, USD lags

It was another day of quiet news flow and big market moves. The dollar continues to deteriorate, leading to the highest levels in the euro this year.

The dollar selling was broad and consistent as Treasury yields fell again. The market is pricing in a drop in Fed funds and inflation in an environment with improving global growth and a solid US economy. There is also the growing likelihood of a deadlocked US Congress leading to less US fiscal stimulus and growth.

That thinking has contributed to a sagging US dollar and exit of crowded longs. The moves have even extended to USD/JPY selling despite an 8-day winning streak in stocks coming into the day.

One area that plays into the disinflation angle is oil, which was down for the fifth time in the past six days. Meanwhile, gold rallied to a fresh record high at $2531 before pulling back by $15.

This article was written by Adam Button at www.forexlive.com.

Even on a losing day US stocks were impressive. Some decent sell orders hit the market midway through the day and it briefly looked like stocks could roll over. However the market steadied itself and rebounded to only small declines, at least outside of the Russell.

• S&P 500 -0.2%
• Nasdaq Comp -0.3%
• DJIA -0.2%
• Russell 2000 -1.0%
• Toronto TSX Comp -0.3%

This article was written by Adam Button at www.forexlive.com.

I find it tough to get excited about benchmark revisions but tomorrow’s non-farm payrolls re-think is getting plenty of attention. Economists at Goldman Sachs think between 600,000 and 1 million jobs could be shed in the revision, raising new questions about the strength of the jobs market just ahead of Jackson Hole.

The Bureau of Labor Statistics conducts an annual revision of payroll figures that compares the data to a more comprehensive but less current source: the Quarterly Census of Employment and Wages. The QCEW derives its information from state unemployment insurance tax records, encompassing almost all jobs in the United States and a June report suggested job growth may have been less robust.

However these numbers are limited to the 12 months ending in March, so it’s not exactly timeline. The current numbers show 2.9 million jobs added in that year or 242,000 per month.

The revisions have gotten plenty of attention but it’s unclear how much markets have priced in or exactly what is expected. JPMorgan sees about 360K jobs lost, for instance.

Also notable, is that the QCEW may actually be a worse report than non-farm payrolls because it doesn’t capture illegal immigrants (NFP does, or tries to). The revisions rely on jobless claims, which obviously aren’t available to illegals.

So on net, I tend to think this will be a non-event for markets but given how quiet the newsflow is lately, I imagine it will get plenty of attention.

This article was written by Adam Button at www.forexlive.com.