Asia Summary and Highlights 27 May
BOJ's Uchida says "we have overcome the zero lower bound"
China launched a US$47bn state-backed fund to boost the country's semiconductor industry
Asia Session
The speech from Ueda sound somewhat supportive towards more tightening (We have made progress in moving away from zero and lifting inflation expectations, but we must now re-anchor them, this time at the 2% target) but the ambiguity (Not so clear if Japan has overcome deflationary norm) is not suggesting confidence in BoJ's next step. Nevertheless, data would be a better cue for policy changes rather than any forward guidance. 10yr JGB yields are steady above 1% and quickly approaching last Thursday high at 1.027%. USD/JPY is trading 0.13% lower at 156.74 with a session high at 156.99.
Regional sentiment improves as China launched a US$47bn state-backed fund to boost the country's semiconductor industry. While the policy itself maybe induced from U.S. sanctions, the setup of such state-back fund will be driving more economics growth and demand for raw materials, which indirectly benefits proxy trades like the Aussie. Combined with the positive industrial profit data from China in April, AUD/USD is trading 0.09% higher at 0.6634, NZD/USD is also 0.12% to 0.6128 while USD/CAD is 0.02% higher at 1.3664. Else, EUR/USD and GBP/USD are up 0.02%.
North American session
The slipped steadily through the North American session, the move gaining some momentum on the final May Michigan CSI release. While the index was revised up to 69.1 from 67.4, markets focused on downward revisions to inflation expectations, the 1-year view to 3.3% from 3.5% and the 5-10 year view to 3.0% from 3.1%. Earlier a stronger than expected April durable goods orders gain of 0.7%, 0.4% ex transport, was ignored.
EUR/USD saw modest gains to 1.0850, the EUR slipping versus the GBP but holding firm versus the CHF. USD/JPY slipped from a little above 157 to a little below before settling near the figure. CAD was particularly firm, USD/CAD slipping to 1.3670 from 1.3720. This was despite a weaker than expected 0.2% decline in March Canadian retail sales, which included an estimate for a 0.7% increase in April. AUD/USD extended gains to .6630.