Asia Summary and Highlights 18 June

Asia session

The NZ Q1 GDP arrived at 0.8% q/q and 1.5% y/y, similar to Q4 2025. However, it is mostly before the energy spike and should be read with scrutiny. U.S. equities remain upbeat, so as Japanese ones while regional equities perform individually. NZD/USD is trading 0.43% higher at 0.5792. AUD/USD is trading 0.27% higher while USD/CAD rises 0.06% on weaker oil.

With the U.S.-Iran MOU signed, market can take a breath now. However, tougher negotiations and integrity on MOU are ahead, should keep every headline live. Market participants are ignoring those now and choose to cheer on lower oil price. We have some kind of jawboning from Japan's chief cabinet secretary Kihara but it sounds weak. USD/PY is trading unchanged at 160.62. Else, EUR/USD is up 0.13% and GBBP/USD is up 0.09%.

North American session

The FOMC meeting proved worth the wait , with the dollar breaking higher - EUR/USD down 1.1% to 1.1480~, cable back to 1.3260, USD/JPY speed-checked as it runs just through the 160.70~ prior highs, renewing intervention concerns.  

Median dot plots show a hike for this year and remaining higher for longer into next year. That slightly overstates things however as Warsh underscores that those projections were highly uncertain and split. The composition shows that with just less than half seeing the hike this year, 6 seeing more than one hike, but 8 seeing rates unchanged, 1 seeing a cut. Warsh did not give a projection.

Press conference had a lot to digest. Warsh underscores the primacy of uncompromising the price stability mandate, and inflation overshoot in general being a choice and down to monetary policy. At the same time, he notes mixed policy stance (seemingly restrictive for housing, loose for financial markets) also highlighting the balance sheet.

In that respect, lots of consequential taskforces announced into data, inflation drivers, AI and productivity and the balance sheet (including the ample reserve framework). Latter is something market should watch very closely as critical for the Treasury curve. 

Earlier, US May retail sales continued to come in impressively resilient, at 0.9% (mkt 0.5%), 0.8% ex autos, and 0.7% on the control (mkt 0.4%).