Weaker Oil, Heavier Yuan Weigh On G10 High-Betas

Offshore yuan went offered in Asia, with Chinese data front and centre today. Annual GDP growth slowed markedly in Q2, but only marginally undershot expectations, while the deterioration in most monthly activity indicators was less acute than projected. USD/CNH showed little reaction to the data after rising in the lead-up to the release. The PBOC set its central USD/CNY mid-point 14 pips above sell-side estimate, which may have lent some support to the pair.

• Weaker crude oil prices applied pressure to high-beta FX, with the Antipodeans pacing losses. Lingering angst surrounding the Covid-19 outbreak in NSW undermined the Aussie, even as local jobs report was stronger than forecast, with headline unemployment rate unexpectedly easing to 4.9% in June from 5.1% in May.
• Safe haven currencies outperformed, with JPY defying any potential impact of Gotobi Day flows and climbing to the top of the G10 scoreboard. USD/JPY extended losses past its 50-DMA.
• Focus turns to U.S. industrial output, Empire M'fing Survey and weekly jobless claims, UK labour market report and comments from Fed's Evans and BoE's Saunders, in addition to the second part of Fed Chair Powell's congressional testimony.