Asia Summary and Highlights 8 May
UAE says it is responding again to a missile threat
Japan Labor cash earnings rose 2.7% y/y
Asia Session
Japan March Labor Cash Earning missed estimate but is still showing a 2.7% y/y growth. While it is disappointing, the trajectory continue to points toward stronger than average wage growth. The results of wage negotiation may not be fully applied yet but one must also be aware of potential slowing, in case business fear margin squeeze from energy shock to withheld strong wage hikes. USD/JPY is trading 0.02% higher at 156.91.
The UAE says it is once again responding again to a missile threat, looks like the fragile ceasefire is not holding. Both sides have been calling such not a break of ceasefire, but what is obvious is, both sides are exchanging fire. It looks like the market may have been in front of themselves in pacing peace dividends bets. AUD/USD is trading 0.14% higher at 0.7216. NZD/USD is trading 0.05% while USD/CAD slips 0.04%. Both Brent and WTI are still trading lower. U.S. major equities are outperforming regional counterparts with precious metal higher. Else, EUR/USD is up 0.03% and GBP/USD is up 0.04%.
North American session
The USD picked up, particularly in the afternoon, more than fully erasing European losses. A WSJ report that Saudi Arabia and Kuwait had lifted restrictions on US military access to bases and their airspace, and that Trump was looking to restart Project Freedom, raised the risk of renewed conflict. Later Iran reported explosions in Qeshm, an Iranian island near the Strait of Hormuz. USD/JPY rose to 156.70 from 156.35 and EUR/USD fell back to 1.1750 from a 1.1775. EUR/GBP was firmer at .8650 from .8640 and EUR/NOK and EUR/SEK largely erased European losses. EUR/CHF and USD/CAD were little changed but AUD/USD fell to .7225 from .7260.
US data was on balance strong, with initial claims still low at 200k if up from 190k. Q1 non-farm predictivity rose by 0.8%. Unit labor costs were weaker than expected at 2.3% but with non-labor costs up by 8.0% the implicit deflator was firm at 4.7%. March construction spending rose by 0.6% after a 0.2% February decline. Fed’s Daly was on the dovish side, seeing policy as modestly r4estrctive.