Sentiment turned sour in the Asia.............>

FOREX: Sentiment turned sour in the Asia afternoon, with participants concerned

with a surprise uptick in U.S. initial jobless claims and awaiting further

developments in Sino-U.S. diplomatic spat. BBG ran headlines confirming that

China asked the U.S. to close its consulate in Chengdu, as touted in earlier

press reports. USD/CNH punched above CNH7.0200, entering the CNH7.0256/96 zone

(Jul 14/8 highs) before the Chengdu headline hit. It eased off highs as China's

decision failed to represent the materialisation of a worst-case scenario. 

- The latest round of risk-off flows cemented JPY outperformance in G10 FX

space. The currency picked up a bid earlier in the session as USD/JPY dived

through a key support, provided by Jul 10 low of Y106.65, amid thinner

liquidity. Japanese markets remain shut for a public holiday. USD/JPY sales

drove a dip in DXY, which plunged to a 22-month low before ticking off there.

- AUD, NZD and CAD lost ground as concerns over Sino-U.S. tensions continued to

linger. GBP remained vulnerable on the back of familiar Brexit jitters.

- Focus moves to UK retail sales, U.S. new home sales and flash PMI readings

from the U.S., UK & EZ.