Asia Summary and Highlights 13 May
Japan's Kato says its natural that monetary policy will revert to positive interest rates
China's April CPI +0.3% y/y vs. +0.1% expected
Asia Session
USD/JPY almost touched 156 earlier in the session. But headlines crossed the wire that Japan's Kato (potential prime minister candidate ) says its natural that monetary policy will revert to positive interest rates and BoJ decreased purchase in the latest JGB purchase operation had driven JGB yields significantly higher and support JPY for a few tad. USD/JPY is trading 0.02% higher 155.77 after touching a session high of 155.96 and low at 155.49.
China's April CPI came in stronger at +0.3% y/y than +0.1% expected. While this is good news, PPI continues to be in negative territories and would remain a drag on CPI. There aslo some headlines from the Chinese front but none is as important as Biden's upcoming tariff to be imposed. Chinese equities opened lower and has barely closed the gap. AUD/USD is trading 0.13% lower at 0.6594, NZD/USD slipped more by 0.18% to 0.6008 while USD/CAD rose 0.09% as oil slip earlier with confusing but later clarified message from Iraq over the weekend on rota cut. Else, EUR/USD is up 0.03% and GBP/USD is up 0.01%.
North American session
A strong 90.4k increase in Canadian employment saw USD/CAD fall sharply to 1.3635 from 1.3680. After the Canadian data the USD initially saw modest gains versus the EUR and JPY but this had been more than fully erased before Michigan CSI data gave the USD a lift. While the headline index fell sharply to 67.4 from 77.2 higher inflation expectations (the 1-year view at 3.5% from 3.2% and the 5-10 year view at 3.1% from 3.0%) caught the market’s attention, the move possibly supported by hawkish comments from Fed’s Logan and Bowman around the same time. USD/CAD reversed most of its drop, though the USD bounce after the Michigan CSI faded elsewhere leaving the USD little changed overall. USD/JPY was a little firmer near 155.90.