Asia Summary and Highlights 8 May

Asia Session

Trump said on his Truth Social that he will be announcing a major trade deal on Thursday but WSJ reported that it will only be a framework of trade deal with UK. China, on the other end, kept up with their harsh words and says China will not compromise its principles in trade talks.  USD/JPY is trading 0.15% higher at 144.01 with U.S, Treasury outpace JGB in yields.

The risk mood is broadly positive on Thursday after Trump's preview on potential trade deal. Sentiment remains upbeat despite WSJ poured some cold water on the details. Both the U.S. major and regional equity indexes are all in the green. AUD/USD is trading 0.28% higher at 0.6444 on the positive sentiment, NZD/USD also 0.32% higher at 0.5959 while USD/CAD is unchanged. Else, EUR/USD is up 0.02% and GBP/USD is up 0.11%.

North American session

With no significant data markets were quiet ahead of the FOMC decision, though the USD did see some marginal gains, Treasury Secretary Bessent confirmed weekend talks with China.  

Shortly before the FOMC statement Trump stated he would not lower tariffs to jump-start talks with China and USD/JPY edged lower, a move that extended below 143 as the FOMC left policy unchanged but saw greater risk of both higher inflation and higher unemployment. EUR/USD similarly reversed pre-FOMC losses.  

However, the USD losses on the FOMC statement were modest, and more than fully reversed during Chairman Powell’s press conference in which he made it clear that the Fed was in no hurry to change rates given the ongoing uncertainty. USD/JPY bounced to test 144 while EUR/USD slipped to test 1.13 from 1.1365, though in neither case was a break seen. The USD also advanced versus the commodity currencies, USD/CAD rising to 1.3830 and AUD/USD falling to .6430.