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ForexLive Asia-Pacific FX news wrap: USD/JPY ticked back above 161.50

New York Fed President Williams is speaking on WednesdayEuropean Central Bank President Lagarde speaks again on WednesdaySouth Korea’s PM says the interest rate path to head downwardsUS President Biden will have a private lunch with Vice President Harris on WednesdayChina Caixin June services PMI 51.2 (expected 53.4, prior 54.0)AUD/USD pops a little on better than expected dataAustralia data – Retail Sales May 2024: +0.6% m/m (exp +0.2%)Australia data – Building permits, May 2024: +5.5% m/m (expected +1.6%)PBOC sets USD/ CNY mid-point today at 7.1312 (vs. estimate at 7.2633)New Zealand data – ANZ Commodity Price Index, June 2024: +1.5% m/m (prior +1.1%)ICYMI – Taiwan says China seizes fishing boat near Chinese coastJapan June Services PMI 49.4 (prior 53.8)Note for the diary – China’s plenum meeting in July will focus on the economyUS politics – Meeting of top Democrats doesn’t resolve question of Biden to stay or goSociété Générale targeting 163.75 in USD/JPYAustralia final June PMI: Services 51.2 (prior 52.5)Bloomberg reports on China making lethal attack drones for RussiaUBS on gold into H2 of 2024 … “most preferred.”Deutsche Bank’s four key risks for H2 of the yearForexlive Americas FX news wrap 2 Jul: Powell acknowledges disinflation, but no cut soonMassive crude oil inventory draw supports case for higher BrentOil: Private survey of inventory shows a much larger headline crude oil draw than expectedChatter of a likely intervention in BRL is gathering paceNASDAQ and S&P indices close at record levelsTrade ideas thread – Wednesday, 3 July, insightful charts, technical analysis, ideas

Let’s
get the politics out of the way first. Speculation intensified that
US Vice President Harris will replace US President Biden on the
ticket for the November election, fuelled by the news that Biden and
Harris will be sitting down to a private lunch together on Wednesday.
Biden will meet with state Democratic Governors in the evening.
EUR/USD ticked a few points lower at the time of this news crossing.
Whether correlation is causation is the question. Had me scratching my head anyway.

USD/JPY
dribbled higher around the same time, but hey, a weak yen is not
news.

On
the data front it was an active session.

Japan’s
June Services PMI collapsed from 53.8 in May to 49.4 in June. Its
first move into contraction in two years. This, of course, could go
some way to explaining the weaker yen during the session.

From
China we had the Caixin June Services PMI come in lower from May
also. It remained in expansion though.

Retail
sales data from Australia came in at a very solid beat indeed, at
+0.6% m/.m vs. +0.2% expected. The Australian Bureau of Statistics
were quick to dismiss the rise, citing consumers responding to
discounting. Most analysts were the same. I am not buying these
explanations. The employment market is still very strong, and we’ve
just had a round of solid tax cuts (these hadn’t kicked in in May
but folks knew they were coming), so maybe better retail sales are
just … better retail sales. These will not prompt an RBA rate hike
in and of themselves, but if the RBA is leaning to a hike to combat
steady and perhaps rising inflation, the sales figures will not stand
in the way.

The
private oil inventory survey showed a huge draw, much higher than the
consensus expectation. Official inventory figures will hit on
Wednesday morning US time.

This article was written by Eamonn Sheridan at www.forexlive.com.

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