Asia Summary and Highlights 12 June
IRGC vows "regret-inducing" response
Asia session
Earlier Friday, we have the tough talk from IRGC marketing their strength. It is after Trump suggest a deal is done and could be read as the Iranian side building a solid image instead of caving to the U.S.. Market participants are still euphoric and see major equity indexes deep in the green. AUD/USD slips 0.18% to 0.7039 as precious metal soft. NZD/USD also 0.24% lower while USD/CAD rises 0.06% with oil still lower.
The back and forth headline is keeping market participants on their toes as no one wants to get caught wrong footed over the weekend again. Broader development seems to persuade market participant that a deal is really close this time and see equities still in the green but all session high. USD/JPY is trading 0.28% higher. Else, EUR/USD is down 0.1% and GBP/USD is down 0.05%.
North American session
While there was no absence of significant news elsewhere, the Middle East dominated price action, overshadowing an ECB tightening and US data. An early announcement from Trump that it would hit Iran hard overnight and take Iran’s Kharg Island in the not-too-distant future helped the USD move higher. However the gains were reversed and more after Trump announced that he had cancelled the strikes and suggested that a peace deal might signed as soon as the weekend, though there was no confirmation of this from Iran.
USD/JPY, after peaking above 160.50 fell to 159.75, while EUR/USD after falling to near 1.15 rebounded to near 1.1580. EUR/CHF fell below .9210 with momentum building late, while EUR/GBP erased a bounce that peaked above .8640. AUD/USD bounced above .7050 from below .70. AUD/CAD was also firmer but USD/CAD reversed a move above 1.40 as peace hopes built.
A 25bps ECB tightening was as expected and the market’s initial reaction was a modest sell the fact. US data was mixed, May PPI on balance firm at 1.1% overall and 0.8% ex food, energy and trade, though ex food and energy was slightly softer than expected at 0.4%. Weekly initial claims at 229k from 225k however hinted at a loss of labor market momentum. UK political problems escalated with the resignation of two Defence ministers objecting to insufficient government funding.