Risks Assets Soar as USD Retraces

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APAC Overview

Overnight sessions saw the Nikkei climbing by 2.31%. That came after Japan’s economy soared more than first reported in Q2. GDP (Gross Domestic Product) grew by 3.5% in Q2 year-on-year. That was stronger than the 2.2% annualized preliminary estimate. Also, the GDP growth was better than the 2.9% median market prediction. 

Private consumption noted a 1.2% jump, outpacing the initial +1.1% estimate. Also, capital spending emerged better than 1.4% (estimated increase) to 2%. Meanwhile, Australia saw a trade surplus shrinking than anticipated in July. That came as coal and iron ore exports declined by 17% and 15%, respectively, whereas imports saw a 5.2% jump. 

Central Banks 

The ASX 200 noted a sharp jump after RBA (Reserve Bank of Australia) governor, Philip Lowe, confirmed the RBA Board wasn’t on a pre-set road and aware rates have soared sharply. Lowe stated they were conscious of the monetary policy lags and swift interest rate increase. He added that the cash rate increases strengthen the slow pace of the hike in rate. 

Yesterday, Fed vice chair Lael Brainard reiterated that the bank prioritizes plans to control inflation. Though she’s aware of the magnifying risk the Federal policy brings to economic growth, Brainard emphasized the need for restrictive monetary policy to lower inflation to the Federal’s target of 2%. 

Also, the BoC (Bank of Canada) increased its policy rate from 2.50% to 3.25% (as anticipated) yesterday. Rates now hover beyond BoC’s neutral territory, and the bank still highlighted continued tightening. The central bank’s statement confirmed a further rate increase due to the current inflation outlook. 

Meanwhile, the market expects another hike from the ECB (European Central Bank) (today). Analysts appeared divided early this week, predicting a 50bp or 70pb hike. Nevertheless, most economist forecasts a 75 basis point rate increase. 


Oil prices note a modest rebound early today, following a 5% drop amid yesterday’s session. The API confirmed a surge for crude oil stocks (3.65M barrels), whereas analysts forecasted 733,000 barrels draw. Meanwhile, the Energy Department released 7.5M barrels from the SPR (Strategic Petroleum Reserves).

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