Asia Summary and Highlights 19 May

Asia Session

The broad risk market is opening lower on Monday as market participants digest Moody's downgrade of U.S.. Major U.S. equity indexes are down and remains volatile but the magnitude are so far limited. Japan PM Ishiba says again can't accept US tariffs on autos, suggesting the trade deal between U.S. and Japan is unlikely to be imminent. USD/JPY opened almost 40 pips lower than Friday's close and continues to trade 0.24% lower at 145.26 from session low of 144.8 as U.S. 10yr Treasury Yields caught up with JGB yields.

Major equity indexes stay low as the Asia session approaches lunch time. There is little new headlines with the slate of Chinese data close to estimate. USD has been trading mostly weaker against majors but off session low. AUD/USD is trading 0.15% higher at 0.6412, NZD/USD also 0.15% higher at 0.5890 while USD/CAD is unchanged from Friday's close. Else, EUR/USD is up 0.18% and GBP/USD up 0.13%.

North American session

The USD picked up, with UST yields, after the Preliminary May Michigan CSI showed inflation expectations surging still further, the 1-year view to 7.3% from 6.5% and the 5-10 year view at 4.6% from 4.4%. Sentiment fell to 50.8 from 52.2. USD/JPY saw highs above 146 from 145.50 while EUR/USD saw lows below 1.1150 from 1.12. GBP/USD was more resilient, sending EUR/GBP down to .84. AUD/USD was also resilient, recovering from a dip below .64. USD/CAD tested 1.40 without breaking, from 1.3950. Equities were resilient despite a brief dip after the data. 

Before the Michigan CSI April US housing starts rose by 1.6% but with single starts lower and permits falling by 4.7% the data looked quite weak, but saw little response. Fed’s Bostic was quite hawkish, seeing a slowdown but not a recession and only one easing this year.