Sessions following Federal Open Market Committee (FOMC) statements see the Asia timezone digesting both the Fed’s decision and the comments from the following press conference by the Chair, Powell. That played out in Asia as usual today, but what was not usual was the continued drop in USD/JPY (which impacted yen crosses alongside, of course).

USD/JPY fell after the FOMC and went into early Asia trade circa 136.50 before dropping down to trade just above 136.00 before stabilising somewhat. Then another large down-draft of selling hit it, taking the pair to lows just over 135.00. There was no fresh news of note. A speech from Bank of Japan Deputy Governor Amamiya reiterated the Bank's commitment to staying the course on its loose monetary policy.

There was little news otherwise. US politics saw an agreement between Senators Schumer and Manchin to advance Biden’s plans, the main points being touted:

  • increase corporate taxes,
  • reduce the national debt,
  • invest in energy technologies
  • and lower the cost of prescription drugs

We’ll see, but for now it appears on track. Manchin has been a roadblock since Biden took office, getting him on board is a new step.

As for data, we had Australian retail sales, these increased at the slowest pace this year. Consumer sentiment has been weak while sales have been strong, a dichotomy that could not be sustained and it appears to be cracking now.

Separately, Australia’s Treasurer Chalmers issued his inflation forecast, says it’ll peak at 7.75% in Q4. This is above his department’s previous forecast (shared by the RBA) of 7%. The Reserve Bank of Australia meets next on August 4, a 50bp rate hike is as good as baked in.

usdyen chart 28 July 2022 wrap