1) Overnight Wrap
A generally quiet Asian session despite a nervous and twitchy market following the comments out of Japan overnight that bring intervention risks closer. Early in our session the US debt limit bill was passed comfortably by the House of Representatives with 269 v 161 votes, and will now go on to the Senate for the vote at midday ET. The dollar gained a slight lift as the vote passed, and stock markets pushed into the green, but the news fizzled out with little flows or strong moves.
Noda took to the wires with his usual comments of “watching markets closely”, and there were a couple of flurries higher in USDJPY from around 77.40 to 77.85 and then again later to 77.75 but these lasted no more than a matter of seconds and quickly found offers and there was no sign or confirmation that there was any intervention.
Australian Building Approvals disappointed at -3.5% mom (exp +3.0%) but some improvement in the revisions meant this had little market effect, particularly with the RBA rate announcement expected later in the day.
As the morning proceeded, stock markets started to drift lower and USD/Asia found a bid, keeping a slight bid tone in the dollar. The RBA kept rates unchanged at 4.75% as was widely expected, but the accompanying minutes were less hawkish than the market had looked for. Despite having considered a hike, they cited heightened risks in the US and Europe and attributed the high CPI readings as a more temporary weather effect. AUD bills rallied around 8-10 ticks and AUDUSD sold from 1.0975 to 1.0950 on the knee jerk and then ground steadily lower to 1.0912 as S&P futures trickled to lows of down 0.45%. AUDNZD took the brunt of cross selling following the more hawkish RBNZ of late. EURUSD trades offered into the London open around 1.4240 as stock markets sit near their lows.
BOJ TO EASE MONETARY POLICY IF TOKYO INTERVENES IN FX MARKET-SOURCES
BOJ TO MULL EASING EVEN WITHOUT FX INTERVENTION IF YEN RISES FURTHER, U.S. ECONOMY UNDERSHOOTS EXPECTATIONS-SOURCE
U.S. DEBT LIMIT BILL GETS ENOUGH VOTES TO PASS HOUSE OF REPRESENTATIVES; VOTING CONTINUES
*NODA SAYS HE’S WATCHING MARKETS CLOSELY
*NODA SAYS HE WON’T COMMENT ON INTERVENTION
*NODA SAYS HE’S CLOSELY WATCHING EFFECT OF YEN ON ECONOMY
*NODA SAYS MORE COMPANIES WILL BE AFFECTED IF YEN GAINS PERSIST
*NODA SAYS YEN CONTINUING TO SHOW ONE-SIDED MOVEMENTS
*NODA SAYS YEN IS OVERVALUED
*NODA SAYS YEN’S GAIN HAS BOTH POSITIVE, NEGATIVE EFFECTS
*YOSANO SAYS HE ISN’T AWARE OF ANY PLAN TO INTERVENE, KYODO SAYS
AUSTRALIA JUNE BUILDING APPROVALS -3.5 PCT M/M, S/ADJ (REUTERS POLL +2.0 PCT),
AUST HOUSE PRICE INDEX FELL 1.9% IN YEAR, ADJ
*JAPAN OFFICIAL SAYS GOVT HASN’T MADE ANY DECISION ON FX POLICY
2) Orderbook & Flow
EURUSD is skewed toward topside offers up to 1.4500 with larger stops below around 1.4070 and bids around 1.4000.
USDJPY offers above around the 78.20-50 handles with stops above these. Large stops below around 76.20.
AUDUSD has stops collecting at the 1.0900 level.
3) USD/Asia Run
USDKRW 1054.0 (Monday morning mids 1052.0)
USDINR 44.43 (44.19)
USDPHP 42.15 (41.94)
USDCNY1y 6.3660 (6.3705)
USDIDR 8465 (8465)
USDMYR 2.9590 (2.9625)
USDTWD 28.84 (28.78)
USDSGD 1.2035 (1.2002)
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