Asia Summary and Highlights 1 May
Japan head intervention official won't comment on FX or oil futures intervention
All three item of Tokyo CPI below target
Asia Session
All three item of Tokyo CPI came in below target in April, continues to point towards government stimulus hiding the underlying inflation and oil shock. The Japan senior currency official Atsushi Mimura won't comment on FX intervention but we all know what happened to lead to such drastic move in the pair. The weak CPI has partially reversed USD/JPY traction since the intervention and see USD/JPY trading 0.41% higher at 157.22. Renewed verbal intervention has little impact.
The broader risk mood is positive on Friday with no news being regarded as good news. There has been limited headlines regarding the U.S.-Iran standoff and market participants are happy there hasn't been more escalation. However, we do not believe there will be strong position building without fundamental changes as no one would like to hold the bag with weekend uncertainty. AUD/USD is trading 0.13% lower at 0.7192. NZD/USD is trading 0.28% lower while USD/CAD rises 0.03%. oth Brent and WTI are little changed, off their session high. Else, EUR/USD is down 0.06% and GBP/USD is down 0.07%.
European and North American sessions
The most notable move of the day was a slide in USD/JPY in the European morning, from near 160.50 to extend below 156.50 in North America, with the BoJ believed to be behind the move. Oil moving off a 4-year high encouraged USD losses generally, EUR/USD up to 1.1740 from 1.1670 though underperforming GBP/USD which rose above 1.36 from 1.3460, as EUR/GBP fell to .8625 from .8660. EUR/CHF fell to .9170 from .9240. AUD/USD rose to .72 from .7120 while USD/CAD moved below 1.36 from above 1.3650.
Both the ECB and BoE left rates unchanged. There was little reaction to the BoE with Governor Bailey appearing open to tightening but the ECB was less hawkish than feared seeing the EUR initially dip. Eurozone flash Q1 GDP was weaker than expected with a 0.1% increase, Flash April HICP at a 33-month high of 3.3% was broadly as expected but a dip in the core rate to a 3-month low of 2.2% was not expected. Q1 US GDP was weaker than expected with a 2.0% annualized rise but with the downside surprises coming from rising imports and a smaller than expected bounce in government (particularly defense) the detail was far from weak. Core PCE prices were firmer than expected at 4.3% annualized as was the Q1 Employment Cost Index at 0.9%. Initial claims fell to 189k from 215k, the lowest since 1969. Continued claims at 1.785m from 1.808m were also lower, leaving the overall US data picture looking firm.