Markets continue to lack a clear direction in early US session. Dollar remains soft in tight range while yen is trying to firm up a bit. Aussie edges further higher but Canadian dollar lags behind as crude oil softens a bit. US Personal income was flat in July versus expectation of 0.1% growth. spending rose 0.2%, inline with consensus. PCE deflator dropped less than expected by -0.8% yoy while core PC also slowed less than expected to 1.4% yoy. U of Michigan consumer sentiment was revised higher to 65.7 in Aug.

UK Q2 GDP was revised up from -0.7% qoq, -5.5% yoy, versus initial estimate of -0.8% qoq, -5.6% yoy. Gfk consumer confidence is unchanged at -25 in Aug versus expectation of improvement to -24. Sterling recovers mildly against Euro as traders take profits ahead of trend line resistance in the cross. Swiss KOF leading indicator rose much more than expected to -0.04 in Aug. Swissy also managed to strengthen against Euro. Eurozone confidence indicators are generally improved more than expected in Aug but provide little boost to the common currency.

Released from Japan overnight, headline CPI dropped further to a record -2.2% yoy in July, inline with expectation while core CPI also dropped to -2.2% yoy. It was the third straight month of record low in consumer inflation data and the fifth straight month of annual falls. Unemployment rate rose to record 5.7% in July while household spending slide -2%. The data argues that the government's stimulus plan are failing to spur demands which in turn push the economy deeper into deflation.

USD/JPY Mid-Day Outlook

With an intraday low in place at 93.21, some more consolidation could be seen in USD/JPY. Nevertheless, while another rise cannot be ruled out, upside should be limited by 95.05 and bring fall resumption. On the downside, below 93.21 will target 91.73 low next.

In the bigger picture, recent development suggests that rebound from 91.73 has completed already. Also, it indicates that prior break of falling channel resistance was a false break. The failure below 98.87 resistance also keeps the lower high pattern since 101.43 intact and thus argues that such down trend is still in progress. A break of 91.73 will confirm this case and bring deeper fall towards lower trend line support (now at 89.82) next. On the upside, break of 97.77 resistance, though, will revive the case that USD/JPY has bottomed out at 91.73 and will turn outlook bullish again.

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Economic Indicators Update

GMTCcyEventsActualConsensusPreviousRevised
23:01GBPGfK Consumer Confidence Aug-25-24-25 
23:30JPYUnemployment Rate Jul5.70%5.50%5.40% 
23:30JPYHousehold Spending Y/Y Jul-2.00%-0.50%0.20% 
23:30JPYNational CPI Y/Y Jul-2.20%-2.20%-1.80% 
23:30JPYNational CPI Core Y/Y Jul-2.20%-2.20%-1.70% 
23:30JPYTokyo CPI Y/Y Aug-1.60%-1.80%-1.80% 
23:30JPYTokyo CPI Core Y/Y Aug-1.90%-1.80%-1.70% 
08:30GBPGDP Q/Q Q2 P-0.70%-0.80%-0.80% 
08:30GBPGDP Y/Y Q2 P-5.50%-5.60%-5.60% 
08:30GBPIndex of Services (3M/3M) Jun-0.60%-0.60%-1.00% 
09:00EUREurozone Consumer Confidence Aug-22-21-23 
09:00EUREurozone Economic Confidence Aug80.67876 
09:00EUREurozone Industrial Confidence Aug-26-28-30 
09:00EUREurozone Services Confidence Aug-11-17-18 
09:30CHFKOF Leading Indicator Aug-0.04-0.59-0.99-0.85
12:30CADCurrent Account (CAD) Q2-11.2B-$11.8B-$9.1B-7.73B
12:30CADIndustrial Product Price M/M Jul-0.50%-0.50%0.70%0.50%
12:30CADRaw Materials Price Index M/M Jul-3.80%-5.00%6.20% 
12:30USDPersonal Income Jul0.00%0.10%-1.30%-1.10%
12:30USDPersonal Spending Jul0.20%0.20%0.40%0.60%
12:30USDPCE Deflator Y/Y Jul-0.80%-0.90%-0.40% 
12:30USDPCE Core M/M Jul0.10%0.10%0.20% 
12:30USDPCE Core Y/Y Jul1.40%1.30%1.50% 
13:55USDU. of Michigan Consumer Sentiment AUG F65.764.563.2