Forexlive Americas FX news wrap: USD/JPY breaks 141 as yen shorts buy the dip

• US June core PCE inflation +4.1% y/y vs +4.2% expected
• Canada GDP for May +0.3% versus +0.3% expected
• US employment costs for Q2 1.0% versus 1.1% expected
• Germany July preliminary CPI +6.2% vs +6.2% y/y expected
• July final UMich US consumer sentiment 71.6 vs 72.6 expected
• Atlanta Fed GDPNow model starts Q3 growth at 3.5%
• Dallas Fed June trimmed mean price index falls to 2.5% m/m annualized versus 3.2% prior
• Former ECB VP says 'no need for more hikes'
• Canadian Q2 GDP is tracking at about 1%
• Baker Hughes weekly US oil rig count -1

Markets:

• Gold up $14 to $1958
• US 10-year yields down 4.9 bps to 3.96%
• WTI crude oil up $0.33 to $80.42
• S&P 500 up 45 points, or 1.0%, to 4608
• GBP leads, JPY lags

The Bank of Japan offered plenty of volatility and drama to wrap up a busy week for central bankers but as the dust settled the market grew comfortable selling the yen. USD/JPY started US trade near 139.00 before finishing near 141.00 after several moves in that wide range in the past 24 hours.

Helping the move were lower yields after a goldilocks US PCE report and falling employment cost index.

Outside of the yen, trading wasn't exactly straightforward as a positive risk trade certainly didn't flow into commodity FX, perhaps owing to domestic concerns and month-end flows. USD/CAD finished slightly higher despite another gain in crude and a rip in equities. AUD/USD tried to mount a comeback in North America but made little progress and finished the day down 0.8% as the market frets about next week's RBA decision.

The euro and pound finished higher but only recovered a portion of the drop a day earlier. The gains came early in Europe and it was mostly sideways in North America with volatility low compared to JPY trades.

Have a great weekend, it was certainly an interesting week. Note that the VIX is down to 13 as the market grows increasingly sanguine.

This article was written by Adam Button at www.forexlive.com.

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