USD/CNH, USD/JPY in Focus as China GDP Slows, Iran-US Tensions Escalate

Asian-Pacific markets navigated a volatile session as China's Q2 GDP growth slowed to 4.3% year-over-year, the weakest pace in three and a half years, while geopolitical tensions between the US and Iran escalated dramatically. China's June retail sales rose a tepid 1.0% y/y, while industrial output held at 5.3% y/y. New home prices fell for a fourth consecutive year, declining 3.3% y/y in June, underscoring persistent weakness in the property sector. These figures weigh heavily on CNH, AUD, and NZD as China-sensitive proxies. Meanwhile, US military strikes on Iranian sites near the Strait of Hormuz triggered retaliatory attacks on US bases in Bahrain, Kuwait, and Jordan, sending oil prices sharply higher and boosting safe-haven flows into JPY and CHF. The Korea Exchange halted trading amid the turmoil. The Nikkei posted modest gains but was capped by caution ahead of ASML earnings. Traders should brace for elevated volatility across oil-linked and safe-haven currencies, with USD/JPY likely pressured lower on risk-off sentiment.