Asia and Highlights 19 June
Japan FM says prepared to take decisive action on speculative FX moves
Japan May headline inflation 1.5% y/y
Geneva talks cancelled
Asia Session
As USD/JPY quickly jumped by a figure on Thursday, we are hearing jawboning from Japanese FM "prepared to take decisive action on speculative FX moves". The FM also suggest the government won't rely on debt to fund food sales tax cut, an act trying to calm market sentiment. On the other hand, May headline inflation stays below 2% at 1.5% y/y. We all know it is driven lower by stimulus and base effect, but the slow consumption cannot be neglected. USD/JPY is trading 0.03% higher at 161.42 with JGB yields higher across the curve.
The week has barely ended yet and we are already having hiccups between U.S. and Iran. Iran has suspended the Geneva talks on Lebanon ceasefire complication. It is hurting the broader risk sentiment as market worries came true. This thorn by the side will likely drive risk asset lower in Friday as no one would like to hold the bag over the weekend. AUD/USD is trading 0.33% lower at 0.6991. NZD/USD is trading 0.53% lower while USD/CAD rises 0.15%. Both Brent and WTI are slightly higher for the session. Else, EUR/USD is down 0.35% and GBP/USD is down 0.31%.
North American session
The bid in the USD extended further in North America, led by USD/JPY which after breaking through 161 saw a spike to 161.75 before correcting below 161.50. Moves in EUR/USD were modest, but the pair was heavy near 1.1450. AUD/USD was also quite subdued, holding above .70, while USD/CAD saw modest gains touching 1.4140 from 1.4120.
The BoE delivered an expected 7-2 vote for unchanged policy generating little response, though later EUR/GBP advanced to .8680 from near .8660. EUR/CHF saw similarly modest gains. US data was in line with expectations, initial claims at 226k from 230k and June’s Philly Fed at 10.3 from -0.4, both improved and doing nothing to undermine the USD, but not as strong as some preceding releases.