Asia Summary and Highlights 20 May
Trump says it will end very quickly again
Market expects Bank of Japan to change its bond purchase tapering in June
Asia Session
For the uncountable times, we are hearing Trump being optimistic of the Iran war to be ended very quickly. The market is choosing to ignore his words for now until there is something concrete. USD remain well supported as geopolitical tension persist. On the other hand, we are seeing far end JGB yields calm a bit. But it does not stop market participants to anticipate a potential change in bond purchase tapering from the BoJ in the coming meeting. If the BoJ is not intervening by special operation, they will at least try to put a lid on yields by slowing their pace of tapering for now. USD/JPY is trading 0.07% lower at 158.97.
It is reported that Trump was briefed on Iran strike options after pausing attack. The lack of progress has not only erased Trump's patience, but also market participants' anticipation of a swift resolve. Major equity indexes are in the red with previous metal also lower. The sour mood is driving AUD/USD 0.08% lower at 0.7101. NZD/USD is also 0.06% lower while USD/CAD rises 0.09%. Both Brent and WTI are slightly lower for the session. Else, EUR/USD is down 0.04% and GBBP/USD is unchanged.
North American session
The USD remained bid with Trump stating he may need to hit Iran gains, as were UST yields, though both saw a modest afternoon correction from the highs. USD/JPY stabilized near 159 while EUR/USD found support below 1.16. EUR/GBP stabilized near .8660 as GBP/USD found support below 1.34. April US pending home sales were on the firm side of expectations, up by 1.4%, a third straight rise.
April Canadian CPI picked up to 2.8% yr/yr from 2.4% on an energy price rise in the month and an energy price drop a year ago, due to the abolition of the carbon tax, dropping put. However the data was softer than expected with the BoC’s core rates slowing. A bounce in USD/CAD on the data was however not sustained, with USD/CAD little changed near 1.3650. AUD/USD found support below .71.