0515 GMT - There is more value in eurozone government bonds than in U.S. Treasurys, according to The Investment Institute by UniCredit. The reason for this view is that the U.S. is more exposed to fiscal risks, its analysts say. In the eurozone, they envisage the 10-year Italian BTP-German Bund yield spreads to hover around 70 basis points. The analysts see the scope for a substantial decline in German yields as limited given the European Central Bank's hawkish stance. The 10-year BTP-Bund yield spread closed at 78 basis points on Wednesday, according to Tradeweb. (emese.bartha@wsj.com)
0500 GMT - There seems to be a high chance for joint U.S.-Japan foreign-exchange intervention to prop up the yen, TD Securities' Macro Research team says in a research report. In a media interview reported Wednesday, Japanese top currency diplomat Mimura's "repeated mention of the U.S. is an attempt to jawbone the market that U.S. officials may be agreeable to a bilateral intervention, which would be a more forceful FX intervention," the team says. "In this scenario, USDJPY could fall much more than the typical 5 figure drop in previous unilateral intervention episodes," the team says. TD Securities perceives Mimura's comments as "deliberate attempt to send a clear warning to yen speculators from pushing USDJPY beyond the 163 level." The dollar is 0.1% lower at 162.39 yen, LSEG data show. (ronnie.harui@wsj.com)
0434 GMT - If Japan's Prime Minister Sanae Takaichi uses her "Basic Policy" economic blueprint--for which Cabinet approval is expected this month--to discourage additional interest rate hikes, it could push back the timing of the Bank of Japan's next move, says Nomura Research Institute economist Takahide Kiuchi. "Even if the government objects, the BOJ will raise rates when it judges doing so necessary--but it will likely show some degree of deference to the government's wishes regarding timing," he says. "Government pressure against BOJ rate hikes risks further weakening the yen and pressuring bond prices lower, which would undermine the stability of the economy and financial markets," he adds.(megumi.fujikawa@wsj.com)
0404 GMT - Indonesia's current account deficit is expected to peak at 3.0% of GDP in 2Q before narrowing in 2H as energy prices ease, CIMB economists say in a note. Indonesia's May trade deficit was driven by an oil and gas shortfall and softer commodity exports, while imports remain supported by investment demand, they say. They maintain their 2026 current account deficit forecast of 1.5% of GDP. Inflation is likely to stay contained, though food prices face upside risks from weather disruptions, they reckon. Easing global oil prices and receding geopolitical tensions should help ease price pressures in 2H, they add. CIMB expects Bank Indonesia to stay on hold through end-2026, while monitoring external conditions, the rupiah and inflation before considering any policy changes. (yingxian.wong@wsj.com)
0340 GMT - The oil-driven inflation shock has likely peaked in South Korea, Barclay's Bum Ki Son says. With the government's gasoline supply price cap lowered to 1,780 won per liter from 1,934 won, retail fuel prices are likely to stabilize at around 1,800 won by the end of July, the economist writes in a note. Falling global oil prices point to further downside for domestic fuel prices, he says. Still, elevated fresh food prices could keep headline inflation relatively high through the summer, he adds. Government data show South Korea's headline inflation accelerated to a 30-month high of 3.2% in June, with petroleum products leading price gains. (kwanwoo.jun@wsj.com)
0327 GMT - The Singapore dollar consolidates against its U.S. counterpart ahead of the U.S. nonfarm payrolls report due out later today. The report poses two-way risks for U.S. dollar, given volatility of the data, Maybank analysts say in a FX research & strategy report. "If it comes out much stronger than expected, this would continue to back the dollar upward momentum but if it is the other way round, then expect the opposite pullback," the analysts add. The U.S. dollar is little changed at 1.2955 Singapore dollars, LSEG data show. (ronnie.harui@wsj.com)
0244 GMT - Bitcoin edges higher in early Asian trade. Carsten Menke at Julius Baer expects volatility in bitcoin trading to remain elevated. Investors' holding conviction appears to be crumbling as prices stay under pressure, he says in a note. Markets are also grappling with selling fears following the announcement from Strategy, bitcoin's largest corporate holder, to raise cash. "Forced selling by such companies is an overhang for digital assets more broadly, but it is not what the markets are pricing at the moment," Menke says. Meanwhile, ongoing ETF outflows point to growing dissatisfaction with bitcoin's performance and concerns over potential U.S. rate hikes and a stronger dollar. Bitcoin is up 0.1% at $60,147.87. (jason.chau@wsj.com)
0207 GMT - Both the minutes of the Reserve Bank of Australia's June policy meeting and the recent comments by Gov. Michele Bullock indicate that the policy rate might still need to be increased at a later date, says Stephen Miller, investment strategy adviser at GSFM. That reflects the inability of government to support the RBA's inflation battle with supportive structural policies, he adds. The RBA faces considerable challenges having to negotiate a tricky path between structural inflation factors and cyclical fragility, he says. (james.glynn@wsj.com; @JamesGlynnWSJ)
0202 GMT - Risks of near-term FX intervention by Japanese authorities to prop up the yen persist, MUFG Bank's Michael Wan says in a research report. "We would be quite wary in the near-term though of intervention risks," the senior currency analyst says. Japanese authorities have a bias to intervene during periods of low liquidity, Wan says, noting looming U.S. holidays. Also, there are risks of intervention if U.S. economic data such as nonfarm payrolls report due out today are "supportive of the directional bias for Japan's Ministry of Finance," Wan says. The dollar is little changed at 162.52 yen, LSEG data show. (ronnie.harui@wsj.com)
0119 GMT - The USD Index is likely in a positive technical setup, based on the weekly chart, says Quek Ser Leang of UOB's Global Economics & Markets Research in a research report. A clear break of the USD Index above the top of the weekly cloud, which is now at 103.20, could open the way for further gains, the senior technical strategist says. Two weeks ago, the USD Index broke above declining trendline resistance, and currently, the 21-week exponential moving average is poised to cross above the 55-week EMA, the strategist says. The USD Index is little changed at 101.398, LSEG data show. (ronnie.harui@wsj.com)
0104 GMT - The yen consolidates against the dollar and other currencies ahead of the U.S. nonfarm payrolls report due today. This report "poses upside risks to USD/JPY," two members of CBA's Global Economic & Markets Research say in a research report. "Another upside surprise in payrolls will likely encourage markets to further reassess up the outlook for U.S. interest rates," the members say. This could push the dollar up toward 165 yen and test Japanese authorities' resolve to defend the yen, the members add. The U.S. dollar is flat at Y162.55, while the Australian dollar edges 0.1% lower to Y111.92, LSEG data show. (ronnie.harui@wsj.com)
0036 GMT - JGBs edge lower in the early Tokyo session, tracking overnight price declines in U.S. Treasurys. Both JGBs and Treasurys tend to move in tandem. However, investors may adopt a wait-and-see mood ahead of Japanese Ministry of Finance's auction today of about 2.6 trillion yen of 10-year sovereign debt. "We expect demand from pension funds at this auction," Citi Research's Tomohisa Fujiki says in a research report. Based on MOF's debt management report showing bids by "other" investors increased last fiscal year, most of these are probably by Government Pension Investment Fund, the rates strategist says. The 10-year JGB yield is 1.5 bps higher at 2.715%. (ronnie.harui@wsj.com)