Asia Summary and Highlights 12 June
Japan May PPI +0.7% m/m, expected +0.4 and +2.4% y/y, expected +2.0%
China May CPI +0.3% y/y, expected +0.4% and PPI -1.4% y/y, expected -1.5%
Asia Session
While all eyes remain on BoJ's interest rate decision later this week, we have stronger than expected PPI, which would be supportive for the BoJ's interest rate decision to hike. The Japan May PPI came in at +0.7% m/m, beating estimate and rose from 0.3% in April and +2.4% y/y with expectation of +2.0%. Despite the fact PPI's translation into CPI has been gradual and limited, it would add fuel to the wage driven inflation in the coming months. U.S. Treasury Yields are performing individually and 10yr JGB yields had dipped below 1%. USD/JPY is trading 0.03% higher at 157.18.
The headline Chinese CPI for May has come in lower than estimate at 0.3% y/y and contracted by 0.1% m/m. But market participants seems to be focused on the improving PPI, which rose from -2.5% to -1.4% y/y, a government led improvement. Regional sentiment is still soft while U.S. three major equity indexes are in the green. AUD/USD is trading 0.16% higher at 0.6616, NZD/USD is barely 0.02% higher at 0.6145 while USD/CAD slipped 0.06% to 1.3749 with oil up twenty cents. Else, EUR/USD is up 0.01% and GBP/USD is up 0.04%.
North American session
In a quiet North American session the USD saw some early gains which subsequently faded. GBP/USD dipped to near 1.27 before rebounding to 1.2740, while USD/JPY returned to near 157 after reaching as high as 157.40. USD/CAD peaked above 1.3790 before slipping to near 1.3750 while AUD/USD kept close to .66. EUR crept up to 1.2740 from a low of 1.2720.
The US NFIB Small Business Optimism Index saw a second straight gain, to 90.5 in May from 89.7, following three straight declines. Canadian building permits surged by 20.5% in Aril after falling by 12.3% in March.