Quiet day to end eventful week, Nikkei takes breather

Asia Market Update: Quiet day to end eventful week; Nikkei takes breather; USD stronger as Trump says firing Fed's Powell 'not necessary'.

General trend

- Nikkei fell nearly 1% after up >5% prior two days on the Japan-US trade deal. Hang Seng also underperformed -1% on a weak day for Asian equities.

- Japan June PPI Services was inline while the closely watched Tokyo CPI for July came in slightly below expectations, but still nearly One Big Figure above the BOJ’s 2% target.

- Japan overnight OIS pricing keeps raising the chances of a BOJ rate hike by October, now up to 66% from 61.5% the day before. A Tier1 bank’s analysts have brought forward their next BOJ rate hike to Oct from prior Jan 2026. There is now even market chatter about a surprise BOJ hike next week to get ahead of potential political uncertainty should PM Ishiba step down in Aug/Sep and also the uncertainty of the Japan-US trade deal is now in the rear vision mirror.

- Australia, likely trying to maintain their relatively low 10% US tariff rate, saw Pres. Trump announce that Australia has apparently agreed to accept American Beef. Trump also warned “Other countries that refuse magnificent US beef” are ON NOTICE".

- [Note: The devil may be in the details over time with the various US trade deals being announced. The Trump admin is generally trumpeting full and open access for US goods, but Japan PM Ishiba affirmed the US-Japan deal does Not entail cuts to Japan tariffs on US goods. Follows on from yesterday the Philippines saying it did Not remove tariff rates for the US from corn, rice, sugar, fish, pork or chicken. Japan’s Nikkei has also expressed that US and Japan differ on the deal details, with no clear start date, and discrepancies seen over the $550B investment by Japan into the US, as well as regarding rice imports and defense spending.].

- RBNZ sees Q2 New Zealand GDP contracting -0.3% (consistent with Chief Economist Conway’s comments yesterday).

- Thai baht drops off recent three-year highs as Cambodia-Thailand border conflict continues, with Acting PM warning situation was "progressing towards war". Bank of Thailand monitoring economic effects. THD ETF -1.6% during US session.

- Recent cypto surge reverses with Bitcoin falling a further -3% to $115K handle, level not seen since the surge up to 123K two weeks ago. Ethereum -4%, XRP -5%, Solana -6%.

- US equity FUTs +0.1% to +0.2% during Asian trading.

Looking ahead (Asian-weighted releases, using Asian time zone)

- Fri July 17th (Fri night US Jun Durable Goods).

Holidays in Asia this week

- Mon July 21st Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.4% at 8,678.

- (US) Pres. Trump: After many years Australia has agreed to accept American Beef! ...Now, we are going to sell so much to Australia...

- UK and Australia will sign £20B nuclear-powered submarine deal – press.

- RBNZ announces latest weekly Nowcast Q2 GDP growth forecast of -0.3%.

China/Hong Kong

- Hang Seng opens -0.5% at 25,531; Shanghai Composite opens -0.1% at 3,604.

- US House Republicans propose bill that would block Chinese purchases of US farmland - Fox.

- Shanghai said to issue Robotaxi license during AI conference to be held July 26-28 - press.

- (EU) Commission Pres Von der Leyen: Had 'excellent' meeting with China Pres Xi this morning; Trade relationship today is not balanced; Competition has to be fair.

- China reportedly seeks views to manage market price order - press.

- China Foreign Ministry: Willing to cooperate with others on rare earth exports.

- China PBOC sets Yuan reference rate: 7.1419 v 7.1385 prio.

Japan

- Nikkei 225 opens -0.3% at 41,700.

- JAPAN JULY TOKYO CPI Y/Y: 2.9% V 3.0%E; CPI (EX-FRESH FOOD) Y/Y: 2.9% V 3.0%E [slowest annualized pace since Mar]

- Japan Jun PPI Services Y/Y: 3.2% v 3.2%e.

- Japan PM Ishiba: Just held meeting of party leaders, including Sanseito; It is key for the US and Japan trade deal to be implemented 'properly'.

- Japan Innovation Party co-leader Maehara: Not thinking about joining LDP-Komeito coalition.

- Japan PM Ishiba: Has ordered team to assess US tariff impact; Affirms US-Japan deal does Not entail cuts to Japan tariffs on US goods.

- Japan reportedly to revise EV subsidies - Japan press [overnight update].

- US Commerce Sec Lutnick: US auto CEOs are cool with higher tariffs than Japan [overnight update].

Korea

- Kospi opens -0.2% at 3,184.

- South Korean and US reiterate that an agreement will be made following recent meeting between Industry/Trade Ministers and Commerce Sec Lutnick - South Korea press.

Other Asia

- Acting Thailand PM: Escalation and progression of military exchanges with Cambodia 'is moving towards war' - financial press.

- Thailand Central Bank (BOT): Too early to assess economic impact from border clashes with Cambodia amid uncertainties.

- Singapore Q2 Final URA Private Home Prices Q/Q: 1.0% v 0.5% prior.

North America

- (US) Former Fed Gov Kevin Warsh: Reiterates his intention to cut in next week's meeting if he was voting.

- (CA) CANADA MAY RETAIL SALES M/M: -1.1% V -1.0%E.

- (US) Jun Chicago Fed National Activity Index: -0.10 v -0.15e.

- (US) INITIAL JOBLESS CLAIMS: 217K V 226KE (fall for 6th straight week); CONTINUING CLAIMS: 1.955M V 1.95ME.

- (US) US Commerce Sec Lutnick: EU really, really wants to make a deal; South Korea very much want to make a deal as well, South Korea will be in office today to discuss deal - CNBC.

- (US) Pres Trump: Everyone is stating that I will destroy Elon’s companies by taking away some, if not all, of the large-scale subsidies he receives from the U.S. Government. This is not so!

- (US) JULY PRELIMINARY S&P MANUFACTURING PMI: 49.5 V 52.7E (1st contraction in 7 months, lowest since Dec 2024); Pricing pressures intensified in both services and manufacturing during July.

- (US) JUN NEW HOME SALES: 627K V 650KE.

- (MX) Mexico Pres Sheinbaum: Presented US with plan to shrink trade deficit; Will speak to US Pres Trump if necessary; Confident Mexico can reach agreement with US.

- (US) July Kansas City Fed Manufacturing Activity: +1 v 0e.

- (BR) Brazil Fin Min Haddad: To present contingency plan for higher US tariffs to Pres Lula on Monday; Plan will include credit lines.

- (US) TREASURY $21B 10-YEAR TIPS AUCTION DRAWS 1.985% V 2.243% PRIOR; BID TO COVER 2.41 V 2.48 PRIOR.

- (US) Pres Trump: Regarding firing Powell, would be a big move, it's not necessary; Maybe three names in mind for next Fed Chair; No pressure on Powell to resign; Reiterates would love interest rates to be lower; We will see how (FOMC) rules on rates - comments with Fed Chair Powell.

- (US) White House Crypto Czar Sacks: Trump declared we have to win AI race in same way Kennedy declared we have to win space race - CNBC.

Europe

- UK PM Starmer reiterates to request of Trump to cut steel tariffs - FT.

- July GfK Consumer Confidence: - 19 v -20e.

- (IE) Ireland July Consumer Confidence: 59.1 v 62.5 prior.

- (UK) JULY CBI INDUSTRIAL TRENDS TOTAL ORDERS: -30 V -28E.

- (TR) TURKEY CENTRAL BANK (CBRT) CUTS ONE-WEEK REPO RATE BY 300BPS TO 43.00%; MORE-THAN-EXPECTED.

- (EU) ECB LEAVES KEY RATES UNCHANGED; AS EXPECTED; Affirms not pre-committing to a particular rate path.

- (EU) ECB chief Lagarde: Higher tariffs and stronger euro are expected make it harder for firms to invest; Underlying inflation overall consistent with target - Prepared Remarks.

- (EU) ECB Pres Lagarde: Could argue ECB is on hold - Q&A.

- (EU) Reportedly ECB Officials say they'll hold rates again in September - press.

- US Commerce Sec Lutnick: EU really, really wants to make a deal; South Korea very much want to make a deal as well, South Korea will be in office today to discuss deal – CNBC.

Levels as of 01:20 ET

- Nikkei 225 -0.8%, ASX 200 -0.5%, Hang Seng -0.1%; Shanghai Composite -0.3%; Kospi +0.3%.

- Equity S&P500 Futures +0.2%; Nasdaq100 +0.1%; DAX -0.2%; FTSE100 flat.

- EUR 1.1734-1.1759; JPY 146.97-147.50; AUD 0.6567-0.6599; NZD 0.6016-6045.

- Gold -0.4% at $3,361/oz; BTC -2.7% at $115,790; Crude Oil +0.4% at $66.27/bbl; Copper -0.4% at $5.8023/lb.