ForexLive Asia-Pacific FX news wrap: USD/JPY trades higher

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rose higher during Asia trade. The Bank of Japan conducted a Japanese
Government Bond buying operation today, leaving the amount of
purchases the same as in its previous operation. In its previous
operation you’ll recall the Bank trimmed back its purchase amount
of 5 – 10 year (remaining until maturity) JGBs, which sent USD/JPY
lower (only to be scooped back up again, this was all a few days
prior to the US CPI sell-off session). USD/JPY rose today to highs
circa 155.90+ and its more or less sitting near those highs as I update.

USD did gain more broadly, though. EUR, GBP, AUD, NZD, CHF and CAD
all lower.

data today we had PPI from New Zealand (see bullets above) and, of
more focus, both house prices and economic activity (industrial
production, retail sales, investment and unemployment) data from
China for April. While house prices continued their slide the other
data was more mixed:

  • Factory
    output beat, unemployment beat
  • Retail
    and investment missed

consumption in China, as reflected in the miss for retail sales, is
still struggling.

bankers also featured. Federal Reserve Bank of Atlanta President
Raphael Bostic said the Fed’s job was not done yet on inflation,
the economy was strong, and he remains “resolute” and
“vigilant” about inflation. He did soften all this by
saying that the outlook right now is for a continued fall in
inflation, which would make it appropriate to reduce rates later in
the year, but nothing is locked in. FWIW I’m tipping September for a cut. As I’ve said before there is the US election just after this and while the Fed is independent, its not THAT independent!

the European Central Bank, Executive Board member Isabel
Schnabel said that depending on incoming data a rate cut in June may
be appropriate, but beyond June the path is much more uncertain. She
added that a rate cut in July does not, at this stage, seem warranted
by the data.

Bank of Japan Governor Ueda said he has no immediate plan to sell BoJ’s ETF holdings.

couple of items still to come to be aware of.

  • There
    is a press conference coming up later today from China’s housing and
    financial regulators regarding policies to ensure housing delivery. I
    haven’t a time for this. The State Council will hold a real estate
    policy meeting also today,
    and is said to be likely to announce major supportive policy measures
  • We
    get a couple of Federal Reserve speakers over the weekend, most
    notably Federal Reserve Chair Powell is speaking at 1530 US Eastern
    time on Sunday May 19, at Georgetown Law commencement ceremony.
    That’s 7.30am New Zealand time on Monday. Asia FX will have super-ultra-thin
    liquidity at that time.

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