Asia Summary and Highlights 23 May

Asia Session

The Japan April National Headline CPI remains elevated at 3.6% y/y, ex fresh food at 3.5% y/y while ex fresh food % energy come in at 3% y/y. The BoJ is stuck now with rising inflationary pressure and U.S.-Japan trade complication, putting them in a difficult spot. It is likely the BoJ will not move until there is more clarity in the trade front. USD/JPY is trading 0.42% lower at 143.39 with the Japanese government seem to be ready to compromise to a certain extent to reach a deal, sparking optimism for a move from the BoJ afterwards. 

Risk sentiment is still choppy on the last trading day of the week. Regional equities are off session high but stays in the green while U.S. major equity indexes have their toes in the red. USD is trading broadly lower against major currencies. AUD/USD is trading 0.4% higher at 0.6436, NZD/USD is also up 0.31% to 0.5916 while USD/CAD slips 0.21%. Else, EUR/USD is up 0.35% and GBP/USD is up 0.25%.

North American session

US data was mostly on the firm side of expectations. Initial claims saw a marginal dip to 227k from 229k, while S and P PMIs increased, both manufacturing and services to 52.3, from 50.2 and 50.8 respectively. Existing home sales fell 0.5% to 4.00m and the Kansas City Fed’s manufacturing survey edged up to -3 from -4, but with some cooling in the price indices. 

UST yield more than fully reversed an early spike but FX and equity moves were modest. The USD had a slightly firmer tone, with USD/JPY reaching 144 and EUR/USD falling below 1.13 after an early correction above. EUR/GBP was softer, testing 0.84, as GBP/USD reversed a dip below 1.34.