Moves were not large during the session here today but were characterised by small, but mixed, gains for the USD. EUR, GBP, CHF and CAD are all down a few points while AUD and NZD are more or less unchanged.

From Japan today we had Tokyo area CPI data for August (the Tokyo inflation data is available around 3 weeks ahead of the nationwide inflation data for the same month and acts as a decent guide to the wider data). Two of the three measures dropped from the July reading while the ‘excluding food and energy’, which is the closest to the US core measure, remained unchanged at 4%. Underlying inflation pressure thus remains solid. All three remained well above the Bank of Japan 2% target. For more on this see the bullets above.

USD/JPY traded up on the session, to highs circa 146.20 but its since dropped back to around 146.00 as I post.

On the central bank news front, the People’s Bank of China once again set the USD/CNY 10+ big figures lower than the modelled estimate. The PBOC is seeking to slow the yuan decline and have done the job, so far.

News flow was light. FX dealers marked time ahead of Federal Reserve Chair Powell speaking at Jackson Hole on Friday morning. He speaks at 10.05 am US Eastern time. Note that European Central Bank President Lagarde is speaking Friday also, while Bank of Japan Governor Ueda speaks on Saturday along with Bank of England Deputy Governor Broadbent. The full agenda of speakers is linked from this post:

Asian equity markets lower ahead of Powell (and following a weak lead from Wall Street of course):

  • Japan’s Nikkei 225 -1.9%

  • China’s Shanghai Composite -0.4%

  • Hong Kong’s Hang Seng -0.8%

  • South Korea’s KOSPI -0.7%

  • Australia’s S&P/ASX 200 -0.9%

USD/CNH daily, showing PBOC efforts to stabilise the currency drop. Successfully this past few days:

People's Bank of China yuan rate 25 August 2023