Asia Summary and Highlights 1 May

Asia Session

The BoJ has kept rates unchanged at 0.5% as per our forecast. While they continue with their rhetoric of "will continue to raise policy rate if economy, prices move in line with its forecast", they have also revised core CPI forecast lower but core-core higher and highlighted risk associated to tariffs. Moreover, GDP has been halved to 0.5% in 2025 and 0.7% in 2026, from 1.1% and 1%. USD/JPY is trading 0.58% higher at 143.88 as U.S. Treasury outpace JGB in yields.

The US Treasury announces agreement to establish US-Ukraine reconstruction investment fund, which is the mineral deal previously discussed. U.S. three major equity indexes are upbeat . AUD/USD is trading 0.16% lower at 0.6392 as import contracts and suggest the recovery in domestic demand remains choppy, NZD/USD is down 0.15% to 0.6393 while USD/CAD rose 0.03%. Else, EUR/USD is down 0.23% and GBP/USD is down 0.32%.

North American session

Q1 US GDP fell by 0.3% annualized, not far from downgraded consensus expectations, with an above consensus 3.5% rise in the core PCE price index. The strength of Q1 core PCE prices was later shown to come from an upward revision to February. March was unchanged, weaker than expected. March pending home sales showed an unexpectedly strong rise of 6.1%. 

The UST curve steepened and equities struggled, though equities came off their lows after the March core PCE price data. USD moves were modest, with some gains after the GDP report that corrected after the March core PCE data. USD/JPY was slightly firmer near 142.85 and EUR/USD slightly weaker near 1.1340.  

AUD/USD however was marginally firmer edging above .64 while USD/CAD moved below 1.38 after earlier rising to 1.3850 on a 0.2% decline in Canadian February GDP. Trump expressed optimism over relations with Canada. Less significantly, Bank of Canada minutes from April 16 showed that a 25bps easing was considered, before reaching a consensus to leave rates unchanged.