The Australian dollar took a hit during the session on the release of May 2023 monthly inflation data. This came in at 5.6%, well below the 6.1% consensus mid-point estimate. Core measures for the month remained above 6% but it was the headline that the market responded to, immediately marking down the AUD. While the monthly CPI print has caveats, the data does not cover the entire ‘basket’ that the quarterly CPI does for example, we don’t get the more reliable quarterly data until late in July. The Reserve Bank of Australia meet next week, July 4, and it would appear the data today is enough for the Bank to leave its cash rate unchanged at this meeting.

While AUD/USD lost ground sharply there losses against the USD also for NZD, CAD, EUR, GBP and CHF, so it wasn’t entirely an AUD story.

From China today we had

  • the People’s Bank of China setting the CNY reference rate nearly bang on 7.21, keeping offshore yuan well off its lows of the week
  • further slumping industrial profits data, for May. While these were not as weak as in April they were still negative y/y

USD/JPY is little changed on the session. We had some yen-supportive remarks from Japan's Finance Ministry's Vice Finance Minister for International Affairs Kanda. He is the guy who will instruct the BOJ to intervene, when he judges it necessary and is often referred to as Japan's 'top currency diplomat'. USD/JPY dipped under 143.80 but has since traded back up above 144.00.

Earlier in the session the Wall Street Journal reported that the Biden administration is considering new restrictions on exports of artificial intelligence chips to China. This kept NQ well away from the highs it managed on Tuesday, US time, and weighed on tech stocks in China also.

As I post oil prices are firming a touch, with WTI futures heading towards $68. During the US afternoon the privately surveyed inventory data showed a larger than expected headline crude draw.

Asian equity markets:

  • Japan’s Nikkei 225 +0.9%

  • China’s Shanghai Composite -0.6%

  • Hong Kong’s Hang Seng -0.2%

  • South Korea’s KOSPI -0.5%

  • Australia’s S&P/ASX 200 +1%

Tracking NQ on Globex:

nq wrap Nasdaq china chip ban Wall Street Journal 28 June 2023

(This chart is from our charting app, which is free and can be found at this link)