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Forex - Yen gains in Asia as data flows offer support, China PMIs ahead

Published 06/30/2016, 08:03 PM
Updated 06/30/2016, 08:06 PM
© Reuters.  Yen holds gains after data

Investing.com - The yen held gains in Asia on Friday after regional data flows offered some support ahead of China PMIs.

USD/JPY changed hands at 103.11, down 0.11% after the data, while GBP/USD traded at 1.3329, up 0.14%. AUD/USD traded at 0.7447, down 0.05%.

In Japan, the Tankan all big industry CAPEX for the second quarter rose 6.2%, beating the 5.9% gain expected.

In China comes the June semi-official CLFP manufacturing PMI from China with a level of 50.0 seen, a slight down tick from 50.1 and just on the edge of expansion. The non-manufacturing PMI is also due with a level of 53.1 the previous month.

Then comes the Caixin manufacturing PMI for June with a 49.1 level expected, down from 49.2 the previous month.

Earlier, Australia's the AIG manufacturing index came in at 51.8, above 51.0 for the previous month.

In Japan national core CPI for May fell 0.4% year-on-year as expected. As well household spending for May dropped 1.1% year-on-year, less than the 1.4% decline seen, but the month-on-month figure fell 1.5%, more than the 0.2% decline expected.

The unemployment rate in Japan for May held steady at 3.2%.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, was last quoted at 95.95.

Overnight, GBP/USD pared some losses after re-testing 31-year lows on Thursday, as Bank of England governor Mark Carney sent strong hints that the Bank of England could ease monetary policy later this summer to help prevent irreparable harm to the British economy in the wake of last week's Brexit decision.

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Delivering his second public address since last week's shocking Brexit outcome, Carney emphasized that the BOE could lower interest rates in the coming months to safeguard the economy from further shocks emanating from last week's Brexit vote. The BOE has left interest rates steady since 2012 and held its benchmark interest rate at a record-low of 0.5% in every meeting dating back to 2009. While the BOE meets next in July, Carney hinted that the central bank could wait until August to loosen policy.

"It now seems plausible that uncertainty could remain elevated for some time,” Carney said. "The economic outlook has deteriorated and some monetary policy easing will likely be needed over the summer."

Notably, Carney said at Thursday's press conference that the Bank of England has not needed to intervene in global foreign exchange markets buy purchasing large quantities of the Pound in order to prevent further losses.

"There were some pretty big moves in the currency, that was to be expected, given the scale of the change," Carney said. "Those markets functioned very well, the markets were liquid, there were huge volumes.

While the currency was moving it wasn't moving because of market technicals, it was moving because of opinions from investors as new information came. The market was functioning and when the market is function you don't want to get in the way."

In the U.S., initial jobless claims rose by 10,000 to a slightly stronger than expected 268,000. The four-week moving average, however, remained unchanged at 266,750, down roughly 10,000 from its level a month ago. Investors await a critical U.S. employment report on July 8 for further indications on the strength of the labor market. In May, the economy added 38,000 nonfarm payrolls, its lowest monthly total in nearly six years.

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Also on Thursday, Federal Reserve Bank of St. Louis president James Bullard reiterated comments made earlier this month after the regional bank's revamped its long-term economic strategy. Under the new forecasts, Bullard said he expects to see annual GDP and inflation growth of 2%, along with slight interest rate increases through 2018. Bullard also emphasized that there is no reason to expect an incoming recession given the current economic data.

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