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On August 1st, Japans Ministry of Finance posted on the social media platform X that the Japanese monetary authorities have multiple tools at their disposal to meet market liquidity needs. These tools include, as appropriate, the use of the Federal Reserves Standing Repurchase Facility (FIMA), which accepts U.S. Treasury securities as collateral to provide temporary dollar liquidity. The Ministry of Finance stated, "We are prepared to utilize available tools as needed to support the orderly functioning of the market."August 1st - According to reports from the United States on July 31st, July this year is expected to be the hottest month on record in the continental United States. Meanwhile, a new "heat dome" is forming in the western United States, and the high temperatures are expected to continue. It is reported that as of July 29th, the average temperature in the United States this July was about 1.4 degrees Celsius higher than the average for the same period from 1991 to 2020. Although the final average temperature data for July will not be released until early August, media predictions suggest that this figure could break the record set in July 2012, making July this year the hottest month on record in the continental United States.Japans Ministry of Finance: Monetary authorities have a wide range of tools to address market liquidity needs.On August 1st, the South Korean National Assembly passed an amendment to the Criminal Procedure Act on July 31st, abolishing the prosecutors authority to conduct direct and supplementary investigations. This is another legislative measure in South Koreas push for reform of the prosecutorial system. The National Assembly passed the amendment with 175 votes in favor, 2 against, and 1 abstention. According to the amendment, the prosecutors office will no longer have the authority to conduct direct investigations, nor may it conduct supplementary investigations on its own. If a prosecutor believes a case requires further investigation, they can only request the judicial police to conduct supplementary investigations.August 1st - According to the Japan Meteorological Agency, a magnitude 5.8 earthquake struck off the coast of Aomori Prefecture, Japan, at approximately 11:48 AM local time today (August 1st). The maximum tremor was felt at intensity 4, and the epicenter was at a depth of 80 kilometers. There is no risk of a tsunami.

The US Dollar Index is higher at 108.00 as strong Fed talk is supported by US inflation

Daniel Rogers

Jul 14, 2022 14:35

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The US Dollar Index (DXY) increased 0.15 percent to 108.20 during Thursday's Asian session, supporting the four-day high inflation report and reversing a two-day loss. An increasing sense of pessimism about Europe and concerns about a worldwide economic slump may also be to blame for the recent surge in the dollar index.

 

Despite being aware of the greatest US inflation numbers in forty years, recent Fed policymakers welcomed the market's hawkish predisposition. Mary Daly, head of the Federal Reserve Bank of San Francisco, recently said that a 75bp hike in July is most likely, but a 100bp increase is still possible, according to the New York Times. Prior to that, Loretta Mester, president of the Federal Reserve Bank of Cleveland, said, "The CPI data does not indicate a smaller rate hike in July than in June," in contrast to Thomas Barkin, president of the Federal Reserve Bank of Richmond, who supported higher rates at the previous meeting.

 

Despite this, the US Consumer Price Index (CPI) rose by 9.1% year over year in June, as opposed to the 8.8% projected and 8.8% before. The Core CPI, which excludes volatile food and energy prices, dropped from 6% to 5.9%, exceeding the 5.8% prediction of experts. It is noteworthy that the BOC announced a 100 bps rate increase, contrary to what the market had anticipated the day before.

 

White House (WH) Economic Adviser Brian Deese said CNBC, as reported by Reuters, that the CPI data shows that Congress has to approve legislation to increase semiconductor manufacture in the US. In contrast, US President Joe Biden claimed that the drop in the price of gasoline had rendered the CPI statistics "out of data."

 

While 10-year Treasury rates dropped four basis points (bps) to 2.93 percent at the close of the Wednesday North American session, Wall Street benchmarks still ended the day in the red. Additionally, US 2-year Treasury rates increased by 3.5 percent in a single day to reach 3.15 percent, which heightened recession fears and strengthened the inversion at the 10-year barrier. As a result, as of the time of publication, S&P 500 Futures had declined by 0.60 percent.

 

The US Producer Price Index for June and the monthly Jobless Claims numbers will soon grace the calendar and amuse DXY traders. However, there will be a strong emphasis on Fedspeak and risk factors like conversation about the recession.


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