MNI China Daily Summary: Wednesday, July 31

MNI BRIEF: BOJ To Raise Further, No Clues on Timing - Ueda

MNI BRIEF: BOJ's FY26 Inflation View Flat; Upside Risk To FY24, 25 Prices

MNI: PBOC Net Injects CNY185.57 Bln via OMO Wednesday

MNI: PBOC Sets Yuan Parity Lower At 7.1346 Weds; -1.39% Y/Y

MNI BRIEF: China July PMI Contracts For Third Straight Month

Flash Inflation In-Line With Tracking; Services Softens But Only Slightly

MNI: EUROZONE JUL FLASH HICP +2.6% Y/Y

MNI: GERMANY JUL UE RATE (SA) 6.0% (FCST 5.9%); JUN 6.0%

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

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FOREX: AUD/JPY Through Late April Lows on CPI, BoJ Surprise

FOREX
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  • Central banks continue to roil markets, with the surprise rate hike from the BoJ of 15bps to 0.25% leaning against expectations split between no change and a 10bps hike. The resultant JPY strength was compounded by Ueda's tone in the post-decision press conference, at which Ueda strongly suggested the BoJ are only at the beginning of their tightening cycle, and 0.50% would be no ceiling for rates in the near-term.
  • USD/JPY has traded through to new pullback lows and - importantly - through 151.94, the low from last week and key pivot level on several occasions since 2022. Both 151.10 support and the 200-dma have also given way, while a close below 97.78 in AUD/JPY would entirely reverse the rally off the late April low.
  • While JPY trades firmer, AUD is the weakest in G10, slipping as CPI came in soft relative to expectations. Both the weighted- and trimmed-mean CPI release for Q2 came in soft, helping usher in AUD/NZD sales and a move below 1.10 for the cross.
  • The Fed decision takes focus later today, at which markets are on watch for any signal from the FOMC that the bank are closing in on a potential rate cut at the September meeting. Outside of the Fed meeting, MNI Chicago PMI is also due, as well as the US ADP Employment Change states for July, and Canada's May GDP update. 
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  • Central banks continue to roil markets, with the surprise rate hike from the BoJ of 15bps to 0.25% leaning against expectations split between no change and a 10bps hike. The resultant JPY strength was compounded by Ueda's tone in the post-decision press conference, at which Ueda strongly suggested the BoJ are only at the beginning of their tightening cycle, and 0.50% would be no ceiling for rates in the near-term.
  • USD/JPY has traded through to new pullback lows and - importantly - through 151.94, the low from last week and key pivot level on several occasions since 2022. Both 151.10 support and the 200-dma have also given way, while a close below 97.78 in AUD/JPY would entirely reverse the rally off the late April low.
  • While JPY trades firmer, AUD is the weakest in G10, slipping as CPI came in soft relative to expectations. Both the weighted- and trimmed-mean CPI release for Q2 came in soft, helping usher in AUD/NZD sales and a move below 1.10 for the cross.
  • The Fed decision takes focus later today, at which markets are on watch for any signal from the FOMC that the bank are closing in on a potential rate cut at the September meeting. Outside of the Fed meeting, MNI Chicago PMI is also due, as well as the US ADP Employment Change states for July, and Canada's May GDP update.