Asia Summary and Highlights 6 Jun

Asia Session

The Japan April household spending contracts -0.1% y/y. It was expected the household spending in April will continue to point upwards but seems to be dragged by negative real wage. Furthermore, the start of Q2 are not likely to be contributing much for economic growth from private consumption. USD/JPY is trading 0.22% higher at 143.82 but the Trump-Musk fiasco continues to attract attention.

The broad risk market stays choppy even after U.S. major equity indexes rebound on calmer Trump and Musk. Regional equities in China and Hong Kong has retreated from earlier high while Nikkei stay solid.  With USD retracing partial gains. AUD/USD is down 0.07% to 0.6509, NZD/USD is trading 0.23% higher at 0.6049 while USD/CAD slips 0.1%. Else, EUR/USD is down 0.03% and GBP/USD is up 0.05%.

North American session

There was little immediate impact to the as expected 25bps ECB easing, but uncertainty over the timing of the next move gave the EUR a lift, EUR/USD to a high of 1.1495 from 1.1420. EUR/GBP rose to near .8450 from .8415 and EUR/CHF to near .94 from .9360. USD weakness was assisted by a bounce in initial claims to 247k from 239k, though April’s trade deficit of $61.6bn from $138.3bn in March was even lower than expected and Q1 unit labor costs were revised up to 6.6% from 5.7%.  

A dip in USD/JPY below 143 on the data was however quickly reversed, with equites lifted, albeit temporarily, by the news that a conversation took place between Trump and China’s Xi, which Trump later described as good. USD/JPY peaked just below 144 before a modest correction. As the USD picked up EUR/USD partially revered its gains, falling to 1.1440, as did EUR/GBP and EUR/CHF. EUR/JPY advanced to 164.30 from 163.50.  Like GBP and CHF, AUD and CAD saw gains versus the USD erased.