Asia Summary and Highlights 13 June
Australian May unemployment rate steady while headline and participation rate beats
Asia Session
Another solid employment report from Australia in May. Unemployment rate dropped to 4% from 4.1% and headline employment change beats with strong gains in full time employment. Participation rate is also 0.1% higher than April. This continue to point out that while the peak has passed, the overall health of the labor market in Australia remain healthy, which maybe a problem for the RBA if they prefer early easing, though it is unlikely. AUD/USD is trading 0.16% lower at 0.6652 as risk sentiment is choppy, NZD/USD also 0.17% lower at 0.6174 while USD/CAD rose 0.13%.
After the back and forth action in the overnight New York session, USD continue to rebound and is driving the USD/JPY as market participants awaits Friday's BoJ decision. The market consensus would be no change in rate but a cut in JGB purchase where our central forecast includes a 10bps hike to keep the latest wage-inflation dynamics in check. U.S. Treasury Yields are higher across the curve while JGB yields slips. USD/JPY is trading 0.2% higher at 157.03. Else, EUR/USD is down 0.03% and GBP/USD is down 0.11%.
North American session
The USD fell sharply on a softer than expected May US CPI, unchanged overall with ex food and energy up 0.2% and only 0.16% before rounding, weaker transport services the main surprise in the detail. USD losses extended through the morning, EUR/USD reaching 1.0850 from 1.0765, USD/JPY falling below 156 from above 157, and AUD/USD rising particularly sharply to .67 from just above .66.
The FOMC dots were more hawkish than expected for 2024, seeing only one 25bps easing rather than the three that was the case in March, though for both 2025 and 2026 they now see 100bps of easing rather than 75bps, and the statement saw modest further progress on inflation in recent months rather than a lack of it. The USD corrected off its lows, and that continued through and even after Powell’s press conference. USD/JPY recovered to 156.80 but EUR/USD held above 1.08 while AUD/USD remained resilient near .6660. In contrast, USD/CAD came close to pre-data levels.