Asia Summary and Highlights 3 June

Asia session

DM FX was choppy in small ranges, as the market waits to see whether Friday U.S. employment report changes expectations on Fed higher for longer.  The ECB meeting Thursday is also being discussed, with 25bps widely expected and the key being how much further forward guidance the ECB gives.

The key focus in Asia was EM currencies after the election results.  The India Rupee surged as exit polls suggests that Modi had a solid re-election, while the Mexican Peso drifted higher before the result of the election.  The South African Rand was choppy, as the Rand has sold off Thursday and Friday on the ANC weak showing that was confirmed with Sunday official results.    

North American session

The USD slipped on a 0.2% rise in the US core PCE price index, though the surprise was marginal, with the gain before rounding being 0.249%. Overall PCE prices at 0.257% were rounded up to 0.3%. The report was generally subdued, with personal income up by 0.3% and spending weaker than expected at 0.2%. Later a very weak Chicago PMI of 35.4 was released.

USD/JPY fell as low as 156.56 while EUR/USD rose as high as 1.0882, but the move was subsequently reversed and the USD ended little changed overall, the bounce led by USD/JPY which moved slightly above pre-data levels to near 157.35, while EUR/USD settled near pre-data levels around 1.0845. EUR/GBP came off its European highs and EUR/CHF gains were mostly erased. The USD rebound came despite UST yields remaining lower. 

USD/CAD showed little reaction to the US data with a 1.7% rise in Q1 Canadian GDP on the low side of consensus, but USD/CAD also did not move higher as the USD rebounded. AUD gains on the data versus both USD and CAD were more than fully erased.