Asia Summary and Highlights 2 June
Ukraine launched a large-scale drone offensive against Russian targets over the weekend
OPEC+ continues to hike output
Bank of Japan has boosted its provisions for JGB losses
Asia Session
Nikkei reported that Bank of Japan has boosted its provisions for JGB losses, suggesting they are likely preparing for higher yields from more tightening in the year. JGB yields are up a notch on Monday so far. USD/JPY is trading 0.34% lower as USD slides broadly and JGB yields outpace U.S. Treasury Yields. Broad equity indexes are all in the red with HSI leading the losses.
Over the weekend, Ukraine launched a large-scale drone offensive against Russian targets. Those targets are deep in Russia and saw significant damage to multiple Russian aircrafts. It brings more geopolitical uncertainty as Ukraine and Russia are still in a negotiation for a peace deal, expected to be meeting in Tukey soon. AUD/USD benefited from broadly soft USD to trade 0.33% higher at 0.6453. OPEC+ decided to continue hiking output by 411k barrels three months in a row but oil price are supported in the open from geopolitical tension. NZD/USD is 0.55% higher at 0.5997 while USD/CAD slips 0.14%. Else, EUR/USD is up 0.18% and GBP/USD up 0.29%.
North American session
The USD was mostly little changed in North America, but USD/CAD fell, eventually by a big figure to 1.3715, after a stronger than expected Q1 GDP increase of 2.2% annualized, which was seen as reducing the changes of a BoC easing on Wednesday. AUD/USD saw only modest gains to .6440 from .6420, while EUR/USD edged up to 1.1355 from 1.1330. GBP/USD was little changed near 1.3470, as was USD/JPY near 143.90, the latter in the middle of a big figure range seen over the session.
US data had a limited impact. A sharp fall in the April advance goods trade deficit to $87.6bn from a record $162.3bn as imports plunged from inflated pre-tariff levels was the main surprise and will support Q2 GDP. Core PCE prices with a rise of 0.1% and personal spending with a rise of 0.2% were subdued as expected in April but personal income saw a strong rise of 0.8%. May’s Final Michigan CSI was revised up to 52.2 from a preliminary 50.8, as inflation expectations were revised lower after the reduction in tariffs on China, the 5-10 year view to 4.2% from 4.6%.