Asia Summary and Highlights 29 May

Asia Session

The Australian April monthly CPI has come in higher than expected at 3.6% y/y. While it is not as comprehensive as the quarterly CPI, it is likely the q2 CPI will likely come in higher than expected and further delay the pace of rate cuts. The level of inflation is still moderating towards RBA's target range of 3% and we are not forecasting the RBA to restart tightening for a small bump. More provinces in China are rolling out support policy for the property sector and continue to encourage the Chinese equity market. AUD/USD is trading unchanged as the aforementioned supportive factors are cancelled by broad USD strength, NZD/USD slipped 0.18% to 0.6130 while USD/CAD rose 0.13% to 1.3663 as oil slips ten cents.

USD/JPY breaks 157 on Monday and is trading 0.06% higher at 157.24 on Tuesday's Asia session. Even though we are not hearing any verbal intervention from Suzuki, one can always feel the cautious tone in the market as we approach the intervention zone. However, given the current pace of USD/JPY advancement, it seems actual intervention will occur at higher level rather than being imminent. 10yr JGB yields continue to march higher while U.S. Treasury Yields perform individually. Else, EUR/USD is trading 0.08% lower and GBP/USD down 0.07%.

North American session

The USD advanced in North America more than reversing losses seen in the European morning. There were no clear catalysts for the move. US May consumer confidence saw an unexpected increase to 102.0 from 97.5 but the USD advance actually took a pause after the release. Fed’s Kashkari said tightening was unlikely but not ruled out and he would not project more than two rate cuts in 2024.

USD/JPY reached 157.15 while EUR/USD and GBP/USD found support just above 1.0850 and 1.2750 respectively. AUD/USD fell below .6650 while USD/CAD touched above 1.3650.