Asia Summary and Highlights 4 June
Bank of Japan Governor Ueda says if inflation moves as expected will adjust policy
Asia Session
USD/JPY has faded the early rebound at 156.48 to 156.15 currently. U.S. Treasury are outperforming JGB yields. While the gap lower in JGB yields seems to be the reason for a run in the pair earlier in the session, comments from Ueda "If underlying inflation moves as we project, we will adjust degree of monetary support" seems to have provided JPY some bids as speculation of an June hike surfaces, echoing our call. Suzuki says intervention in late April/early May a response to speculation after the BoJ report shown roughly 10 trillion JPY was spent in FX intervention and says will continue to respond appropriately.
Risk sentiment is mixed with HSI squeezing out some gains after dropping close to 1% while Chinese, Japan and U.S. equities all fell. Preliminary data, business inventories, profit, etc. all points towards a softer GDP to be released on Wednesday. They are dragging the AUD/USD down 0.22% to 0.6674, NZD/USD is down 0.06% to 0.6188 while USD/CAD rose 0.16% to 1.3648 as oil continue to slip. Else, EUR/USD is up 0.01% and GBP/USD is down 0.03%.
North American session
The USD slipped on weaker than expected May ISM manufacturing index of 48.7, down from 49.2, with the slippage largely due to new orders sliding to a 12-month low of 45.4 from 49.1. USD/JPY, trading around 156.70 before the data, briefly touched below 156 before recovering to around 156.25. EUR/USD rose from around 1.0850 to touch 1.09 while GBP/USD rose from around 1.2740 to touch 1.28. EUR/JPY recovered to around 170.30 after falling as low as 169.72.
Equities came under some pressure and a bounce in AUD/USD after the data was mostly reversed while USD/CAD, after finding support at 1.36, moved above pre-data levels. EUR/CHF slipped but recovered from lows below .9750. Equities moved off their lows in the afternoon.