Asia Summary and Highlights 7 May

Asia Session

Two important macro headlines we have on Wednesday. The first one is India launching missiles into Pakistan to target alleged terrorist camp, it is a response for the terrorist attack two weeks ago. It further escaltes geopolitical tension between two nuclear nation. Secondly, we have headlines crossing the wire that U.S. and China will be talking in Geneva this weekend officially. This seems to be supporting the broad risk sentiment. USD/JPY is trading 0.53% higher at 143.16 despite JGB outperforms U.S. Treasury yield.

The PBoC has cut rates across policy, RRR and reverse repo rate. Regional equities are strongly supported but partial opening gains in the Chinese equity indexes are retraced while U.S. three major equity indexes are almsot up by a percent. AUD/USD has reached a session high of 0.6515 before giving it all back to trade 0.14% lower at 0.6485, NZD/USD also 0.08% lower at 0.6002 while USD/CAD is up 0.11%. Else, EUR/USD is down 0.09% and GBP/USD is down 0.11%..

North American session

The USD maintained a weaker tone in North America, the move assisted by a dip in UST yields after a successful 10-year auction. GBP/USD gains stalled once 1.34 was reached, but USD/JPY fell below 142.50. EUR/USD advanced to 1.1375 assisted by CDU leader Merz being elected Chancellor at the second attempt. EUR/GBP reversed most of its European losses to return to .85, while EUR/CHF remained firm near .9350.  

With oil firmer the commodity currencies advanced, AUD/USD reaching .65 and USD/CAD falling to 1.3765, a meeting between Trump and Canadian PM Carney seeing disagreements, but causing no real alarm. Earlier the US recorded a record trade deficit of $140.5bn, even wider than expected, as falling service exports added to a surge in goods imports ahead of the April 2 tariff announcement.