Asia Summary and Highlights 18 June

Asia Session

The RBA meeting has kept rates on hold with recognition of slower CPI moderation than expected. The interest rate decision aligns with our forecast as the RBA could not justify neither tightening nor easing when the quarterly CPI is at 3.6% while monthly CPI stays at 3.6% q/q, above the RBA's target range and show minimal progress of moderation in the past months. With no change to their forecast of returning to target range in mid 2025, it seems to point towards the current rate will be held longer. AUD/USD is trading unchanged after a twenty pips swing, NZD/USD is down 0.24% at 0.6116 while USD/CAD rose 0.11% as oil down forty cents. 

In Ueda's speech before the Diet, he said the BoJ could raise interest rates at July meeting, depending on economic, price and financial data and information available at the time. While such remarks from a central bank governor usually spark an immediate and drastic reaction in the market, USD/JPY barely moved as Ueda's credibility has been tarnished by repetitively not following through. The overall direction within BoJ did not change with expectation of strengthening in Japan wage-price cycle and thus inflation. USD/JPY is trading 0.06% lower at 157.61 with JGB yields outpace the U.S counterpart. Else, EUR/USD is down 0.12% and GBP/USD is down 0.07%.

North American session

After some early gains the USD drifted steadily lower through the session. USD/JPY was relatively resilient, slipping to near 157.75 after a test of 158 failed. EUR/USD advanced to 1.0730 meaning that EUR/JPY gains extended to 169.30. GBP/USD advanced to 1.27, seeing EUR/GBP partially correct from earlier gains. EUR/CHF also moved off its highs, but remained firm. USD/CAD slipped to 1.3730 from 1.3760 while AUD/USD edged back above .66.

There was not much news. June’s Empire State manufacturing survey was stronger than expected at -6.0 from -15.6 while Fed’s Harker said he expected only one easing this year.