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USD/JPY advances to six month high post-testimony

Economy faces years of strong jobs growth in a low inflation environment

The dollar continued to push higher in Asian trading, building on gains made in the previous session after Fed Chairman Powell’s described the US economy as in a good place during his semi-annual testimony before the Senate Banking Committee. He said he sees the economy on track for years of strong jobs growth in a low inflation environment. However, given the as yet unquantified threat of trade tariffs, he did mention that, while policymakers were on a path of gradual rate hikes, the tightening is not a “fait accompli” and implied it could be flexible should data dictate.

USD/JPY continued its march higher, touching its highest level in six months. Equity markets struggled to echo positive sentiment on Wall Street, with losses of 0.24% for the Nikkei, 0.99% for Chinese stocks and a loss of 0.33% for Singapore. The only bright spot was Australia where the index rose 0.16%. There were no key data releases in Asia, so other currency pairs drifted in line with the dollar’s advance.

Goldilocks economy warrants a Goldilocks Federal Reserve chairperson

Japan bolsters trade links with Euro-zone

Japan and the European Union signed a trade agreement yesterday that lowers barriers on the movement of goods and services between the two economies. The agreement has been a work in progress since 2013 and it may be more than just coincidence that the deal is finalized as the two economies face the problems of US protectionism.

While on the trade topic, the G-20 meeting gets under way in Argentina this weekend and treasury secretary Mnuchin has stated he will not seek a bilateral meeting with China during the get together. Meanwhile the US Treasury Department has reiterated that it labels China’s behavior as economic aggression.

GBP/USD – UK job numbers disappoint, send pound lower

UK dominates the data calendar

The data dump from the UK continues today. Following on from yesterday employment and wages data, today features CPI and PPI numbers for June. Headline inflation is expected to tick up to 2.6% y/y from 2.4%, according to economists’ forecasts while core data is seen edging up to 2.2% y/y from 2.1%The Euro-zone also reveals its inflation data while the US session has housing starts and building permits to contend with. We also have the second session of Fed Chairman Powell’s testimony before Congress and the release of the Fed’s Beige Book to look forward to.

You can see the full MarketPulse data calendar for today here: https://www.marketpulse.com/economic-events/

Oanda Market Beat

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