Japan's producer prices rose 7.2% in July, keeping the BOJ on track for a September hike. RBA's Kent leaned dovish, weighing on AUD. RBNZ survey trimmed rate hike bets.
Japan's producer prices stayed elevated at 7.2% in July, keeping the Bank of Japan on course for a rate increase at its September meeting even as the headline figure came in below the 7.4% forecast. A 29.1% jump in yen-denominated import prices kept imported inflation pressure firmly in place, the Bank of Japan said Thursday. The yen held near the 160 mark against the dollar, with traders watching for any intervention from Japanese authorities.
The dollar posted modest gains on the session, while both the Australian and New Zealand dollars softened. The Australian dollar came under pressure after Reserve Bank of Australia Assistant Governor Christopher Kent's remarks, which market participants interpreted as leaning more dovish than hawkish. Kent said cash rate increases are having their intended effect, with the rate near the top of neutral estimates and housing market conditions softening. He noted that substantial AI-related investment continues to support aggregate demand and flagged weak productivity growth as complicating the inflation outlook. Valuations in some equity markets are very generous, he added.
The New Zealand dollar softened after the Reserve Bank of New Zealand's third-quarter inflation expectations survey showed a sharper-than-expected pullback. One-year inflation expectations fell to 2.6% from 3.4% in the second quarter, while two-year expectations eased to 2.3% from 2.5%, the survey showed. The softer readings trimmed market expectations for a rate hike at the RBNZ's next scheduled decision on September 2, economists said.
Equity markets in Asia extended a rally driven by strength in US chip stocks. Japan's Topix climbed to a record high and the Nikkei rose around 1.6%, tracking a sharp overnight advance in the Philadelphia Semiconductor Index. South Korea's Kospi surged around 4%, with foreign investors leading heavy buying in Samsung Electronics and SK Hynix.
Oil edged lower on Thursday after reports gained traction during the session that the United Arab Emirates had released a further tranche of Iran's frozen assets held in Emirati banks, reportedly including gold worth in the region of $212 million, transferred over August 11 and 12. If accurate, it would mark the third such release by the UAE government, though the underlying claim has not been widely corroborated.
In corporate news, Apple is in discussions with publishers over multiyear content deals intended to supply current news to its AI-powered Siri assistant, the Wall Street Journal reported, with the company proposing a variable, pay-as-used compensation structure and a possible nine-figure budget. Ford Motor (F, Alpha Score 50/100, Mixed) said it plans to shift production of some Lincoln models from China to the United States starting in 2030, with chief executive Jim Farley telling Reuters that a 52.5% US tariff on the China-built Lincoln Nautilus was the primary driver behind the decision. The Wall Street Journal also reported that more than 40 S&P 500 companies have booked around $9.6 billion in tariff refunds in recent months, with several, including FedEx and Costco, saying they plan to pass at least a portion of those savings on to customers.
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