Asia Summary and Highlights 22 May

Asia Session

The USD/JPY strengthened in early Asia, when headline crossed the wire that US Treasury Secretary Bessent met with Japan FM Kato. As Kato has previously stated that FX will be in discussion with his U.S. counterpart, market participants are envisioning the potential collaboration between the U.S. and Japan to support USD/JPY. However, the move was faded after Kato's remark that he agreed with Bessent that FX rates should be set by markets and no other comment for FX level, further confirmed by japan's vice FM Mimura. USD/JPY resumed downward traction and is trading 0.22% lower at 143.33 after fading the spike to 144.40.

Regional equities are soft on Thursday, mostly in the red with Chinese SSECI close to closing the down gap. U.S. three major equity indexes are doing slightly better, up an aver 0.1%, looks like a minimal bounce from the overnight drop. USD is trading broadly lower but magnitude is so far limited as major headlines were only reading JPY. AUD/USD is trading 0.17% higher at 0.6448, NZD/USD is down 0.26% to 0.5924 while US/CAD slips 0.05%. Else, EUR/USD is unchanged and GBP/USD is up 0.04%.

North American session

With Republicans struggling to reach agreement on fiscal policy, UST yields picked up sharply, the move accelerating after a weak 20-year auction, and this weighed on equities. FX moves were modest but the USD had a negative tone. After the weak auction EUR/USD again edged above 1.1360 and USD/JPY slipped below 143.50 but neither move was sustained. CAD was firmer as forecasts for a June BoC easing were reconsidered after Tuesday’s strong core CPI, USD/CAD slipping to 1.3850 from 1.3890 with AUD/CAD at .8915 from .8950.