Asia Summary and Highlights 17 Jun

Asia Session

Despite missiles are still flying, choppy market has tilted towards more optimistic with Trump suggesting he will be proposing for nuclear /peace talks with Iran. The G7 also issued a joint statement reiterating their position on no nuclear weapons for Iran. BoJ keep rates unchanged as expected. The changes to bond purchase tapering are also aligning with market forecast, by 200 billion JPY after Q2 2026. The remark from Japanese PM Ishida on Monday has poured cool water on expectation of a trade deal to be reached soon. Trump also seems to be distracted by the geopolitical tension between Israel and Iran by departing the G7 summit early. Our central forecast sees the BoJ to hike by 25bps in the September meeting if a trade deal is to be reached before. USD/JPY reversed earlier gains to 145.1 and is trading 0.18% lower at 144.44 while 10yr JGB yields approaching 1.5%.

The broad equity indexes are all in the red, except Japanese equity index. The USD is trading individually against major currencies. AUD/USD is up 0.19% to 0.6536, NZD/USD is also 0.11% higher at 0.6067 while USD/CAD is unchanged. Else, EUR/USD is down 0.02% and GBP/USD is down 0.03%.

North American session

The USD saw some early slippage, EUR/USD rising to a high of 1.1615 and USD/JPY falling to a low of 143.65. However, this was reversed later in the day, and more so for USD/JPY, which advanced to 144.75, supported by gains in equities and UST yields. EUR/USD slipped to 1.1565 but EUR/CHF was firmer near .9410. GBP/USD and AUD/USD were relatively resilient, seeing marginal gains on the session, but could not hold above 1.36 and 0.6550 respectively. USD/CAD was little changed near 1.3570. 

Equities were supported by a report that Iran was seeking a deal to end the conflict with Israel. The only US data release was June’s Empire State manufacturing survey, which was mixed, the current month index weak at -16.0 from -9.2 but 6-month expectations bouncing to a positive 21.2 from -2.0.