The lead in to Asia was a stronger US dollar and (much) weaker US equity markets.

Asia FX was more subdued, but USD/JPY did make a higher high than it had seen on Thursday (US time), above 130.75. Movement for the other majors was not as much, EUR, GBP, AUD, NZD, CAD, CHF all dipped a little lower against the US dollar. Offshore yuan hit an 18 month low against the dollar.

On the news front there was little to note.

Data was more interesting, specifically Japanese inflation data. Today we had the April figures for Tokyo inflation (nationwide numbers for April will follow in 3 weeks, the Tokyo data serves as an early guide to these). Headline CPI rose at its fastest in nearly thirty years. The more important underlying rate of inflation (core inflation) saw CPI excluding fresh food and energy record a rise also. Eyes will be on the nationwide data ahead to see if the Tokyo numbers are reflected more widely, and also further out to see if core inflation can reach the BOJ’s 2% target and be sustained there.

On the central bank front, we had the Reserve Bank of Australia release its quarterly Statement on Monetary Policy. Inflation forecasts were ramped significantly higher while those for GDP were cut. For the AUD the impact was not great. AUD/USD has dribbled lower as have other majors vs. the USD and the expectation of further rate rises ahead from the RBA is well accepted.

RBA core CPI forecasts - we could be above the top of the target band for quite some time to come:

22 cpi forecasts 06 May 2022 rba.jpg