Asia Summary and Highlights 26 June
Australia May Monthly CPI 4% y/y
Asia Session
The May Australian monthly CPI has come in hotter than expected at 4%, up 0.4% from 3.6% in April. This confirms RBA's remark in the last meeting, suggesting the overall pace of CPI moderation is not only slower than estimated but also rebounding higher in the past month and expected to remain high on energy prices and the end of rebate. However, there is little market participant anticipating any easing in 2024 and the Australian economy does not allow much room for further tightening. Thus, any CPI led spike would likely be short lived. AUD/USD is trading 0.44% higher at 0.6676 despite risk sentiment mixed, NZD/USD diverged and slipped 0.11% to 0.6114 on broadly stronger USD while USD/CAD is unchanged.
With little on the news front, USD/JPY is again grinding towards 160. We had not hear much from Japanese officials on Wednesday, maybe they are aware of the ineffectiveness or maybe they are letting the silence speak. It is worth mentioning that the last intervention at sub 160 level was not previewed by verbal intervention yet that day being a Japanese holiday could be a cause. U.S. Treasury Yields are performing individually while 10yr JGB rose above 1%. USD/JPY is trading 0.08% higher at 159.8 with session high at 159.9. Else, EUR/USD is down 0.04% and GBP/USD is unchanged.
North American session
The USD was slightly stronger in North America with USD/JPY moving back above 159.50 though a dip in EUR/USD below 1.07 was not sustained leaving EUR/USD little changed on the session. GBP/USD also reversed a dip moving back to near 1.27. US data had little impact with consumer confidence little changed and near consensus. Fed’s Bowman was hawkish early on suggesting further tightening could be seen if progress on inflation stalled but Cook was more balanced, stating easing would become appropriate at some point.
USD/CAD saw a sharp 50 pip slide to a low of 1.3626 after May Canadian CPI unexpectedly increased to 2.9% yr/yr from 2.7%, though subsequently returned to near 1.3650 to leave USD/CAD little changed on the day.