Asia Summary and Highlights 10 June
U.S.-Iran Keep the Missiles Flying
Asia Session
Things begin to escalate after U.S. Army Apache helicopter being downed over the Strait of Hormuz. U.S. launched three waves of airstrike against Iranian air defense, radar and ground control sites, then Iran retaliated with Bahrain, Jordan and Kuwait airstrikes on U.S. military bases. It seems to be a serious escalation that will derail talks, risk asset have already taken a hit and may rotate further lower. AUD/USD is trading 0.21% lower at 0.7013. NZD/USD is trading 0.07% lower while USD/CAD slips 0.02% as oil rotating lower after the initial spike.
One would expect great volatility in the good old days for USD/JPY when uncertainty rises. But as USD being favored for haven seeking and JPY dragged by fiscal worries, USD.JPY kept marching north. Interestingly, USD/JPY is unchanged on Wednesday despite rising risk aversion. It seems market participants are well aware of the hawkish risk from the BoJ next week and potential intervention, to avoid getting wrong footed in JPY shorts. USD/JPY is unchanged at 160.36. Else, EUR/USD is up 0.05% and GBP/USD is up 0.06%.
North American session
The USD moved slightly higher through the morning before losing momentum in the afternoon, still up from the lows but little changed on the day. Early USD weakness was assisted by optimism from Trump about achieving a deal with Iran but the USD had already started to recover before Trump stated that Iran had downed a US helicopter and that the US must respond. This brought a bounce in oil and added to pressure that had already been building on equities, led by the tech sector.
USD/JPY advanced to 160.40 from 160.20 while EUR/USD erased earlier gains, returning to near 1.1540. EUR/CHF was stronger but EUR/GBP weaker. AUD/USD was weaker but found support above .70 while USD/CAD picked up to 1.3950 from 1.3920. AUD/CAD found support after a dip below .98.
US data was on the firm side of expectations. April’s trade deficit narrowed to $55.9bn from $56.6bn with March revised from $60.3bn. Later May existing home sales rose by 3.2% while April wholesale sales rose by 2.0%. Canada saw a C$2.72bn trade surplus in April, the highest since January 2025.