Asia Summary and Highlights 12 May
Japan and U.S. reaffirm currency cooperation after Bessent's Tokyo talks
Iran is ready to dilute highly enriched uranium to levels of 3.7% and 20%
Trump said the ceasefire is "on life support"
Asia Session
There is not much risk positive headlines on Tuesday as both sides do not seem to be closing gaps. Apart from finger pointing, we do have reports that Iran is willing to compromise the transferal of nuclear materials by dilution, yet it is hard to see Trump will accept that. U.S. major equity indexes are in the red while regional equities performing individually. AUD/USD is fell by 0.26% to 0.7230 as there is also no support from soft precious metal. NZD/USD also 0.14% lower while USD/CAD rises 0.1%. Both WTI and Brent are higher for the session.
It is reported that Japan and the United States have reaffirmed their close cooperation. It was expected U.S. will press Japan to avoid extreme JPY weakness but we have yet to hear from Bessent yet. The MoF has likely intervened multiple times in the past week, a convenient timing for political incentive and USD/JPY reaching above 160 figure. What is left to discuss is whether the U.S. will try to strongarm Japan into hiking rates. USD/JPY is trading 0.32% higher at 157.63 after poor March household spending data. Else, EUR/USD is down 0.24% and GBP/USD is down 0.26%.
North American session
USD/JPY rose to 157.25 from 157 and with EUR/USD slightly firmer EUR/JPY pushed above 185 to 185.20. A speech by UK PM Starmer did not end pressure for him to step down and EUR/GBP saw some slippage, but a move off the low kept the eventual move marginal. AUD/USD made modest gains to .7250 but USD/CAD was little changed.
April US existing home sales saw a marginal 0.2% increase to 4.02m, weaker than expected, but with March revised up to 4.01m from 3.98m the net result could be seen as near consensus.