ForexLive Asia FX news wrap: Yen intervention round 1, the jawboning

Forex news for Asia trading Friday 31 July 2020

• Japan fin min Aso says FX stability is important
• Mnuchin says negotiations made some progress, to continue Friday, Saturday
• AUD/USD forecast - to top out around 0.8000
• Yen continues to gain - MoF intervention earlier not impacting
• Australian data - private sector credit -0.2% m/m in June, PPI -1.2% q/q in Q2
• PBOC sets USD/ CNY reference rate for today at 6.9848 (vs. yesterday at 6.9902)
• FX option expiries for Friday July 31 at the 10am NY cut
• Australia Victoria +627 and NSW +21 new cases
• China July PMIs, manufacturing 50.1.1 (expected 50.8) services 54.2 (expected 54.5)
• Japan senior official says no comment on forex then makes comments on forex 
• China's Xinjiang region reports 112 new coronavirus cases today
• Mnuchin says 'we are going to keep negotiating'
• Japan Industrial Production for June (preliminary) +2.7% m/m (expected 1.0%)
• Japan Jobless (Unemployment) rate for June 2.8% (expected 3.1%)
• UK industry body warns most companies lack time and resources to prepare for a no-deal Brexit
• Softbank group to buy back up to 12.3% of shares (around 1tln yen)
• ANZ warns of a material risk of a double-dip recession from Q4 2020
• China infrastructure stimulus - 3 times as many pile drivers are sold as are sold in all of US & Europe
• US coronavirus - vaccine (when it comes) distribution will be ‘joint venture’ between CDC and Pentagon
• Coronavirus - Trump says cannot ensure safety of children when he reopens schools
• New Zealand - ANZ Consumer Confidence Index for July -0.2% % m/m (prior +7.4%)
• Meadows says “I’m not even optimistic about next week.”
• Toyota sales recover to 84% of last years level. Toyota sales plunge 16% y/y. (Choose the headline you prefer).
• RBNZ's Bascand speaking - says it will be 'some time' before economic recovery
• Trade ideas thread - 31 July 2020
• Apple reports EPS of $2.58 on revenues of $59.69 billion
• US major indices close session mixed
• UK Coronavirus - Government announce major local lockdowns
• Meadows says Trump supported a weeklong extension of enhanced unemployment at $600 per week
• Alphabet reports adjusted EPS of $10.13 on revenues of $38.9 billion
• Amazon reports EPS $10.30 on revenues of $88.9 billion
• Gilead expects to make 2m courses of its coronavirus drug Remdesivir by year end
• Facebook reports EPS $1.80 on revenues of $18.68 billion

Currencies moved higher against the USD right after the US close as big tech firms (Apple, Amazon, Facebook) announced beats on estimates, and there were tentative signs from the White House they were working towards getting the next round of stimulus passed.

The currency moves soon stabilised but when the big 3 centres of Tokyo, Singapore and Hong Kong became active the moves extended further almost across the board (CAD was a laggard).

USD/JPY dropped from early highs around 104.80 to lows circa 104.20. On the way down we had comments out Japan's Ministry of Finance, first from an official and then later from the Minister Aso himself, saying they sought FX 'stability', which is a coded way of saying the yen is appreciating too quickly. This verbal intervention has had little impact, though. As I update USD/JPY is on its session lows.

AUD, EUR, GBP, CHF all gained against the dollar. NZD did also but is a little behind the others while USD/CAD is little net changed. Gold spurted above $1,965 and is trying 1970 as I post.

Other news centred on continuing negotiations in Washington between Pelosi & Schumer and Mnuchin & Meadows on the various matters making up the next stimulus bill - extension of extra unemployment payments are one of the key issues. Talks have concluded for the evening with the usual non-committal sort of comments to media along the lines that some progress had been made, there are still sticking points, and there will be more talks to come (Friday and Saturday says Mnuchin).

On the data front a couple of notable releases. Japanese industrial production bounced m/m in June after the dismal drop in May. The Japanese government upgraded its assessment for factory output, saying it had bottomed. From China we got the official PMIs for July, with a fifth consecutive month of expansion for manufacturing and an expansion again for services (albeit below the consensus central estimate).