Asia Summary and Highlights 24 May

Asia Session

The April Japan y/y CPI continue to moderate with headline falling to 2.5% from 2.7%, ex fresh food to 2.2% from 2.6% and ex fresh food & energy to 2,4% from 2.9%. While it remains above 2%, the further moderation would put a cap on BoJ's tightening magnitude. 10 yr JGB yields gained its foot above one percent while U.S. Treasury yields retrace after the overnight gains. USD/JPY is trading 0.1% at 157.05. Despite the lack of verbal intervention, one can not rule of the possibility of BoJ's intervention if USD/JPY continue to rally from this point.

Regional equities in Japan, Hong Kong and China are all in the red after the U.S. equities slumped in the New York session on higher U.S. Treasury Yields. USD is trading broadly stronger and see AUD/USD slipped 0.1% to 0.6600, NZD/USD also slips 0.03% to 0.6097 while USD/CAD rose 0.05% to 1.3735 as oil treads lower. Else, EUR/USD and GBP/USD are down 0.05%.

North American session

The USD spiked higher on stronger than expected S and P PMI data, most notably services which rose to a 12-month high of 54.8 from 51.3 while manufacturing picked up to 50.0 from 50.0. USD/JPY spiked from 156.70 to a high of 157.20 before moving back below 157 as equities came under pressure. Elsewhere USD losses accelerated, particularly in the riskier currencies, AUD/USD falling to .66 from .6650 and USD/CAD up to 1.3735 from 1.3660. EUR/USD fell to near 1.08 from 1.0860. GBP/USD moved below 1.27 with EUR/GBP little changed but EUR/CHF slipped to .9885 from .9910.

Other US data had little impact. Initial claims fell to 215k from 223k suggesting a still firm labor market but new home sales fell by 4.7% to 634k.