Asia Summary and Highlights 15 May

Asia Session

Bloomberg reported that the Chinese government is considering buying unsold homes to ease oversupply. While the plan is in in early stage, the idea that "National Team" will be coming in to scoop the oversupply in housing is good enough to support sentiment. The Australia Q1 Wage Price Index came in slightly lower than estimate at 0.8% q/q and 4.1% y/y but it is not far from the 4-4.2% forecast from the RBA and Australian government. AUD/USD is trading 0.24% higher at 0.6643, NZD/USD also 0.25% higher at 0.6056 while USD/CAD slipped 0.04% as oil up ten cents.

Apart from the Antipodeans, major FX are rather muted. USD/JPY is down 4 pips at 156.35 with 10yr JGB yields continue to challenge 1% and U.S. Treasury Yields performing individually. EUR/USD is up 0.02% and GBP/USD up 0.01% as most market participants patiently waits for U.S. CPI.

North American session

The USD saw an early bounce as April US PPI increased by a stronger than expected 0.5% on both the headline and ex food and energy rates, though the reaction faded ahead of comments by Fed’s Powell, with downward revisions to March, both headline and ex food and energy, to a 0.1% decline from increases of 0.2% offsetting much of the upside surprise in April.

The USD slipped after Powell’s comments, which noted a lack of further progress on inflation and reduced confidence that inflation would fall further, but also saw the labor market moving into better balance and seeing a rate hike as unlikely.

USD/JPY ended little changed near 156.45, while EUR/USD rose 20 pips from pre-data levels to 1.0820 while GBP/USD rose 30 pips to 1.2590. AUD/USD advanced to .6625, outperforming the CAD. EUR/CHF advanced to .9810.