Japan retail sales rise by a stronger-than-expected 0.9% y/y in June

Good morning,

- Investors now worried about the Yuan currency. A decade after China released the yuan from its peg to the dollar, ever more international money managers no longer regard the currency as a one-way appreciation bet.

- Asia shares trade higher, helped by Wall Street rally.

- Japan retail sales rise by a stronger-than-expected 0.9% y/y in June

- $NZD was the best performing major vs $USD on Tuesday with +1.26% spot returns while $EUR and $JPY were the worst performing with -0.25%.

- Retail sales in the world's third-largest economy rose an annual 0.9 percent in June, beating expectations for a 0.5 percent rise but still slowing sharply from a 3 percent spike in the previous month. The report comes after the government recently downgraded its forecasts for consumer prices. It's now expecting a 0.6 percent rise for the 2015 fiscal year, compared to previous estimates for a 1.4 percent increase, due to a continued declines in oil prices. Japan is one of the largest net importers of crude oil so a lower energy bill means consumer prices rise more slowly, a major obstacle to the central bank's goal of achieving 2% inflation rate.

- RBNZ's Wheeler: Several factors are supporting economic growth, aim to return inflation to 2% in 9 to 12 months..Sees several risks around inflation outlook, more substantial $NZD depreciation is required. Several factors are supporting economic growth, aim to return inflation to 2% in 9 to 12 months.

- Chinese Stocks Just Created a New Headache for Janet Yellen…Exit strategies used to be the preoccupation of Pentagon planners. Nowadays, it’s more a province for central bank watchers, since the Federal Reserve gorged on trillions of dollars of mortgage and government debt. And in that economic realm, China has just added a new conundrum. The dependence of the nation’s stock market on official support was exposed Monday with the biggest drop since 2007 amid speculation aid had been dialed back. The Shanghai Composite Index fell 1.7 percent Tuesday even after China pledged to keep up efforts to “stabilize” the market.

- Since February 3 2015, Australian economic releases have been increasingly underperforming relative to economists' expectations. -Citi

- GBP volatility potential was sapped by an 'in-line' UK GDP outcome.

- Goldman: Why Euro Downtrend Run Out Of Steam & Why It Will Resume? In a note to clients today, Goldman Sachs discusses why the Euro down move has stalled and why they think it will resume. The following are the key points in GS' argument along with its targets for EUR/USD over the coming months. Why EUR/USD downtrend has stalled? 1- "In our minds, the EUR/$ down move from near 1.40 just over a year ago to current levels was always about regime change at the ECB, which was set in motion by falling inflation. In short, it seems the Euro down trade was about the ECB moving away from its Bundesbank roots and embracing what – in Frankfurt at least – counts as highly unconventional policy," GS points out.

- Supreme Court Brings Lawsuits Against Varoufakis to Greek Parliament. Greece’s Supreme Court forwarded two lawsuits filed by Greek citizens against Yanis Varoufakis to parliament, which must now decide whether the former Minister’s immunity should be lifted so tha he can stand trial. The lawsuits were filed by Stylida Mayor and “Teleia” party head Apostolos Gletsos and lawyer Panagiotis Giannopoulos. The two men filed the lawsuits after the tapes of a Varoufakis speech revealed his scheme to set up a secret parallel payment system and push for the return to a national currency.

- Crude Oil, Gold Treading Water as SPX 500 Tries to Launch Recovery.

- Japan's Banks Look to Buy Abroad.

- Watch for today: Germany August GfK consumer climate survey, UK mortgages, FOMC Statement.

Have a nice Day!