Asia Summary and Highlights 2 June
RBA board member Harper said stronger-than-expected domestic demand and the return of capacity constraints have reopened the output gap
Trump told ABC News a Hormuz ceasefire extension and reopening deal could come within a week
White House trims tariffs on farm and industrial gear
Asia Session
While RBA's Harper sound hawkish, it is hard to see RBA to hike the fourth time in a row when monthly CPI has begin moderating. On the other hand ,we have Trump telling ABC that a deal is near, again. Market participants doe not seem to react to such cry of the wolf anymore. U.S. major equity indexes are in the red while regional equities performing individually. AUD/USD is trading 0.04% higher at 0.7164. NZD/USD is trading 0.05% while USD/CAD rises 0.02% on lower oil.
It is reported that the White House is trimming tariffs on farm and industrial gear to 15%. That looks like Trump tried to keep the inflationary pressure lower from the prolonged Iran conflict. USD/JPY is gathering steam beneath 160 to trade 0.04% higher at 159.72. Else, EUR/USD is up 0.06% and GBP/USD is up 0.08%.
North American session
The USD and oil bounced as Iran signaled it was withdrawing from negotiations with the US in protest against Israeli actions in Lebanon. There was some move off the highs after Trump stated that Israel would not to send troops into Lebanon’s capital Beirut, and that Israel and Iran’s ally Hezbollah would not attack each other, though he also suggested he saw no urgency in talking to Iran.
USD/JPY bounced to 159.70 from 159.45 with very little correction. EUR/USD after slipping to 1.1610 from a.1650 recovered above 1.1630 seeing losses in EUR/JPY erased. EUR/GBP was softer near .8640 but EUR/CHF stronger near .9150. Losses in AUD/USD and AUD/CAD were largely erased. USD/CAD saw limited movement, but was marginally stronger. Equities were supported by tech.
May’s US ISM manufacturing index of 54.0 from 52.7 could be seen as USD supportive, as was a slightly stronger than expected 0.4% rise in April construction spending, but focus was elsewhere.