The UK’s high streets are heaving with shoppers notwithstanding June's shock vote to abandon the European Union. Moreover, big businesses have already reported few signs of distress, while some tabloid newspapers are discussing a post-Brexit economic boom.
The overwhelming view from financial experts is that it’s too early to know how the United Kingdom will cope with years of Brexit uncertainty, though there’s a soaring belief that the country can avert a recession, which just weeks ago was regarded as probable.
On the face of it, the early upbeat mood contrasts with the pre-referendum warning from ex-Prime Minister David Cameron that Brexit would put a bomb under the British economy.
In August, retail sales reversed much of an immediate post-Brexit vote dip, with retailers posting their strongest sales for six months as industry data revealed on Thursday, mostly due to a weaker sterling attracting overseas buyers.
Japan July consumer prices show the biggest annual fall for three years
In July, Japan's core consumer prices edged down for a fifth straight month and demonstrated the most enormous annual sag for more than three years, as more companies had to hold back price lifts due to poor consumption, thus keeping the major bank under pressure in order to expand an already massive stimulus program.
The gloomy data backs a dominant market view that Japanese premier Shinzo Abe's stimulus programs have turned unable to dislodge the deflationary mindset prevailing among consumers and businesses.
In July, the nationwide core consumer price index, excluding volatile fresh food prices, but including oil products, sagged 0.5% from a year earlier, as government data revealed on Friday. In fact, it exceeded a median market forecast for a 0.4% drop and it turned a bit bigger than a 0.4% tumble in June.
While dropping energy costs were mostly behind the dip in consumer prices, ascends in imported food prices as well as hotel room rates moderated in a clue that poor consumption is discouraging firms from passing on soaring costs.
On Tuesday, the evergreen buck tumbled against the Japanese yen, while the New Zealand dollar went up right after the country’s major financial institution informed that they don’t see the necessity for a rapid succession of interest rate drops.
The evergreen buck lost 0.1% to 100.220 against the safe-haven Japanese yen amid a pullback in Tokyo shares.
The greenback had soared to nearly 101.00 yen overnight, reacting to hawkish-sounding comments by Federal Reserve Vice Chair Stanley Fischer.
The euro grew 0.1% to $1.1332, thus stepping off an overnight minimum of $1.1271.
The Australian dollar ascended 0.1%, being worth $0.7638 , moving up on the coattails of the New Zealand dollar.
The New Zealand dollar appeared to be a relatively big mover in a subdued Asian trading session.
The New Zealand dollar earned 0.6%, being worth $0.7308 after Reserve Bank of New Zealand Governor Graeme Wheeler informed that the current interest rate track suggests further monetary easing, although he didn’t see the need for an instant series of rate drops.
Kiwi rises further along with yen and Aussie
The New Zealand dollar kept rising in Asia, notwithstanding remarks from RBNZ Governor Graeme Wheeler on the scope for further interest rate drops, while the Australian dollar and the Japanese yen ascended too, following a light regional data day.
The currency pair NZD/USD was worth 0.7298, rising 0.36%. Meanwhile, AUD/USD traded at 0.7635, demonstrating a 0.20% soar, while USD/JPY was worth 100.13, tumbling 0.20%.
The US dollar index, gauging the US dollar’s value against a trade-weighted basket of six key counterparts, traded 94.46, descending 0.06%.
Traders are currently focused on a highly anticipated speech by Fed Chair Janet Yellen at the annual gathering of top major bankers as well as economists in Jackson Hole, Wyoming, this week for new signals on the timing of the approaching US rate lift.
Overnight, the evergreen buck pared profits against the other key currencies in subdued trade on Monday, though hopes for a probable American rate lift before the end of the year still ensure support to the US dollar.
In July, Japanese exports slumped at the fastest pace since the global financial downtime with a resurgent yen along with weakness in overseas economies weighing on overseas shipments, thus leaving the national economy and the government more reliant on unsteady domestic demand to drive growth.
The 14% annual slump in exports in July generally matched the median estimate in a Reuters survey of economists and was the fastest drop since October 2009.
Japan's exports have sagged for 10 consecutive months, which is the longest losing streak since losses on American subprime mortgages spurred a global financial meltdown that almost destroyed the American financial system.
Economists tell there’s a surging risk that weakness in exports will remain as global economic uncertainty demonstrates little sign of receding, that could undermine Japanese policymakers' efforts to re-energize the national economy.
EconomyVN - The latest report from the Japanese government said the Japanese economy in the 2nd quarter of 2016 equals to the previous quarter and rise only 0.2% compared to the same period of 2015.
Accordingly, contrary to the forecasts of economists, growth in the Japanese economy in the second quarter of this year is only at 0%, due to weaker exports and reduced business spending. This result creates tremendous pressure on Japanese officials to revive the country's economy, while there are also more skeptics about the effectiveness of the economic program "Abenomics" lasted many years by Prime Minister Shinzo Abe.
The above figure is lower than the market's forecast and raises concerns about the stalemate of the Japanese Government in their efforts to recover the 3rd largest economy in the world.
Last week, Tokyo announced a new economic stimulus package worth up to 28.000 billion yen to support the economy, after the results of Brexit have made the global financial markets wobble.
On Friday, the evergreen buck held firm, backed by comments from a Fed speaker, suggesting that an American interest rate hike this year is still real because inflation pressure keeps growing.
American retails sales data along with a series of Chinese economic indicators due later in the day will be the market's next key focus points, though trading could be slow with many investors in Japan on leave this week for the summer holidays.
The dollar's index against a basket of six key counterparts edged up to 95.906 from this week's minimum of 95.442 achieved on Wednesday, though it will probably conclude the week lower, having lost approximately 0.3% so far.
The evergreen buck appears to be on a much more substantial footing than when financial markets were worried about the actual impact of Brexit. It might take time a bit but its direction is definitely looking upwards.
Against the Japanese yen, the evergreen buck firmed to 101.83 yen from this week's minimum near 101 yen, although it stood still on the week so far.
Aussie goes down on disappointing China data
The Australian dollar sagged on gloomy data out of key trading partner China on industrial output, retail sales as well as fixed-asset investment.
China’s fixed-asset investment for July soared 8.1%, below a pace of 8.8% observed year-on-year, while industrial production acquired 6.0%, also below an expected at 6.1% year-on-year revenue, while retail sales headed north 10.2% under the expected up 10.5% year-on-year growth observed.
The currency pair AUD/USD traded down 0.26%, hitting 0.7190, while USD/JPY was worth 102.15, up 0.19%.
Earlier, in New Zealand, the Business NZ PMI tumbled to 55.8 for July, sagging from a previous reading of 57.7. Moreover, core retail sales for the second quarter leapt 2.6%, better than the quarter-on-quarter reading observed up 1.1%. As for full retail sales, they spiked too, approximately up 2.3%, compared to a 0.9% quarter-on-quarter revenue observed and an annual pace of 6.0%, thus outpacing the 4.9% expected from the same quarter a year ago.
The currency pair NZD/USD hit 0.7195, showing a 0.21% sag after of the figures and also a statement that the major bank would delay measures just to curb house loans.
EconomyVN - At Bitcoin Exchange in Hong Kong (China) nearly 120,000 Bitcoin was stolen, an equivalent of 72 million USD.
72 million dollars Bitcoin stolen in Hong Kong
On 4th of August, at Bitcoin exchanges in Hong Kong nearly 120,000 Bitcoins, or $ 72 million was stolen. This is the second-largest theft of virtual currency Bitcoin in history. Bitcoin value immediately dropped by nearly one quarter after this news. It is not clear whether the theft was caused by hackers.
Japanese stocks fell sharply after the economic stimulus programs of the Central Bank
Tokyo Stock Exchange fell sharply in the trading session of the early week because investors reserved with the economic stimulus programs of Japanese Government. Late last week, Central Bank of Japan announced that they will implement monetary easing by launching extended loan packages of $ 24 billion without accompanying structural reforms. Measures to support Japan's markets were disappointed after Brexit for the financial world.
Bank of England cut interest rates to record low
To deal with Brexit, on 5th of August, Bank of England cut interest rates to a record low of 0.25%. Immediately, the stock is the first field having benefit. At session close on 05/08, in London, the FTSE 100 rose 1.59%. Shares in British banks also rose to its highest level since Brexit, thanks to the stimulus package of quantitative easing.
On 2nd of August, the Cabinet of Japanese Prime Minister Shinzo Abe adopted a new economic policy stimulus package of more than 28,000 billion yen (274 billion dollars).
The Japanese government estimates that with this economic stimulus package the country will increase GDP by 1.3% in the context that the domestic economy is facing a strong reduction of consumption, private investment, slow growth of economic world and risks.
Due to financial difficulties, most of the economic stimulus package will not rely on the general budget, which is removed from the financial loan and investment programs.
It is expected that the draft budget will be submitted to an extraordinary session of Japan's parliament convened in mid-September.
On Tuesday, Asian stocks held weaker as markets became cautious on Japan as well as its efforts on monetary and also fiscal policies and noted poor Australia data.
In Japan, the Nikkei 225 edged down 0.68% after Japanese Finance Minister Taro Aso told exchange rates were demonstrating extremely nervous moves. Additionally, the minister unveiled its readiness to closely watch currency movements.
Meanwhile, in Australia, the S&P/ASX dropped 0.19% as June’s building approvals sagged 2.9%, compared with a 0.5% revenue observed month-on-month as well as the trade balance soared to a deficit of approximately A$3.195 billion from an expected deficit of A$2 billion as well as last month’s figure of about A$2.418 billion.
The Shanghai Composite slumped 0.16%.
Overnight, American stocks showed quite mixed performance after Monday’s close, as revenues in the Healthcare, Technology and Consumer Services sectors brought stocks higher, while losses in the Oil & Gas, Telecoms as well as Basic Materials sectors brought stocks down.
Australian stocks go down at close of trade
Australian shares traded after the close because losses in the Resources, Energy as well as Gold sectors brought stocks down.
The S&P/ASX 200 dropped 0.72% at the close in Australia.
The best performers of the trading session on the S&P/ASX 200 included Credit Corp Group Ltd with a 11.19% soar at 14.900, GWA Group Ltd with its 3.76% gain at 2.210 and Ozforex Grp with a 2.86% surge at 2.520.
As for the worst performers of the trading session, we should point out to Seven West Media Ltd with its 17.87% tumble at 0.850, Nine Ent Fpo with a 13.89% slump at 0.930 and Beach Energy Ltd, that descended 5.70%, being worth 0.537.
Dropping shares outnumbered surging ones on the Australia Stock Exchange by 697 to 421, while 314 stood intact.
Stocks in Credit Corp Group Ltd soared to all time peaks, up 11.19%. Stocks in Nine Ent Fpo edged down to all time minimums, sagging 13.89%.
The S&P/ASX 200 VIX, gauging the implied volatility of S&P/ASX 200 options, surged 2.87%, trading at 14.752.
On Friday, the Japanese yen earned further on a slew of data from Japan across retail sales, consumer prices, industrial production and household spending and all ahead of a closely-watched major bank policy review.
The currency pair USD/JPY was worth 104.19, showing a 1.03% tumble, while AUD/USD soared 0.36%, trading at 0.7530.
Later during the trading session, the Bank of Japan will disclose its latest monetary policy statement as well as interest rate decision.
Earlier in Japan, in June, household spending edged down 1.1% in month-on-month, compared to an expected 0.4% revenue with year-on-year demonstrating a 2.2% sink. As for national CPI, it slumped 0.4% in June year-on-year, thus matching expectations, while the unemployment rate descended to 3.1% from 3.2%.
Apart from that, in Japan, industrial production headed north 1.9%, which is much better than the 0.7% revenue observed for June month-on-month. Additionally, retail sales sagged 1.4%, slower than the 1.5% drop expected.
The Bank of England (BoE), European Central Bank (ECB) and most recently, the US Federal Reserve, have all issued their most recent monetary policy statements in the past two weeks. All of these three major central banks opted for inaction – the BoE and ECB refrained from implementing post-Brexit stimulus measures for the time being while the Fed again deferred a long-postponed rate hike. Friday finally brings the Bank of Japan’s (BoJ) highly-anticipated policy statement, which will most likely buck this recent trend of inaction.
On Wednesday, Japanese Prime Minister Shinzo Abe revealed an unexpectedly sizable 28 trillion yen government stimulus package, which placed immediate pressure on the BoJ to follow suit by expanding its stimulus program. The key question weighing now on the global markets, and the yen in particular, is the extent to which the central bank will cooperate with Abe’s aims to boost Japanese economic growth.
Most analysts expect some form of stimulus from the central bank, including possible asset purchases and/or a further interest rate cut, but the uncertainty lies in the magnitude of these actions. This magnitude will likely serve as one of the main drivers of market movement on Friday and into next week for both the Japanese yen and major equity markets. Of course, in the very unlikely event that there is no BoJ action at all, volatility in the markets should be particularly pronounced, potentially leading to a dramatic surge for the yen.
As usual, USD/JPY will be one to watch, as it can serve as a good barometer of yen movement. Another key currency pair that should also see high volatility during this event, however, will be EUR/JPY, especially since Friday also brings a solid series of European economic data.
In the event of more comprehensive stimulus than expected from the BoJ on Friday, the yen will likely be pressured to retreat sharply, pushing EUR/JPY to rise and extend its rebound from recent multi-year lows. In the opposite event of a substantially lighter stimulus package that disappoints Abe and other Japanese government officials, the yen could resume its longer-term strengthening, potentially pressuring EUR/JPY to continue its downtrend of the past year.
This EUR/JPY downtrend is clearly framed by two key trend lines that have shown an acceleration of the bearish trend this year. Most recently, the currency pair established a post-Brexit multi-year low around 109.50 in late June. This was followed by a rebound within the past three weeks that boosted EUR/JPY up to a key 61.8% Fibonacci retracement level before falling back.
Currently, in the immediate run-up to the BoJ policy statement, the currency pair is bumped up against its 50-day moving average to the upside. To the downside is the major 115.00 support level. Depending on the outcome of the policy statement, any surprise could likely lead to a breakout price move. With less-than-expected stimulus, EUR/JPY could break down below 115.00, which could put it on track to target downside support around 111.00, followed by a potential resumption of the entrenched bearish trend. With more-than-expected stimulus, EUR/JPY could rise above its 50-day moving average, in which case, the next major resistance targets are around the 119.00 level, followed further to the upside by the noted accelerated downtrend line.