Asia Summary and Highlights 31 May

Asia Session

Obviously, the key headline of the day would be Donald Trump's conviction of falsifying business record and sentencing would be on July. So far its impact towards the market seems muted as Trump is one of the first U.S. president to be convicted of felony and it is unclear whether it will affect his run for presidency as first timers are usually fined and instructed for community service instead of imprisonment. On Friday, we also have Chinese may manufacturing PMI which show a contraction at 49.5 while service at 51.1, both missing estimates. Regional risk sentiment does not seem to be affected and is in the green but AUD/USD has reversed earlier gains to trade 1 pip lower at 0.6632 as USD solid, NZD/USD is up 0.16% to 0.6124 while USD/CAD slipped 0.05%.

The May Japan Tokyo headline y/y CPI has rebounded above 2% to 2.2% from 1.8%, so as ex-fresh food and energy. Ex fresh food y/y CPI stays below 2% at 1.9% but also rebounded from 1.6% in April. While Tokyo CPI likely come in National CPI most of the time, we are forecasting National CPi to also rebound to 2% y/y on accelerating wage growth. 10yr JGB rebounds while U.S. Treasury Yields continue to soften. USD/JPY is trading 0.02% higher at 156.83. Else, EUR/USD is down 0.13% and GBP/USD is down 0.1%. 

North American session

The USD extended European losses in North America, with US data coming in on the soft side. Q1 GDP was revised down to 1.3% from 1.6% as expected, the revisions led by consumer spending which was revised to2.0% from 2.5%, while cote PCE prices saw a marginal downward revision to 3.6% from 3.7%. Initial claims saw a marginal rise to 219k from 216k but the big surprise was a wider advance goods trade deficit fir April, of $99.4bn versus $92.3bn in March, which adds to risk of another subdued quarter from GDP in Q2. Later April pending home sales reported a sharp 7.7% decline.

EUR/USD advanced to 1.0835 from 1.0815 ahead of the data while GBP/USD rose to 1.2735 from 1.2710. USD/CAD fell to 1.3680 from 1.3710 while AUD/USD rose to .6635 from .6620. USD/JPY was relatively resilient, moving slightly above pre-data levels to around 156.80 with only a brief dip. EUR/CHF and EUR/SEK extended European losses, falling below .98 and 11.50 respectively.