Japanese inflation data was the focus for the day. April CPI came in higher than March in another acceleration. The Bank of Japan insist inflation is expected to fall from around October. Note the ‘transitory’ inflation argument has not worked out well at all for other DM central banks. Earlier this week a rise in power bills was approved in Japan. This will be a tailwind for higher headline inflation in the June figures once the rises kick in.

USD/JPY responded, slowly, to the rise in inflation, the yen rose to push USD/JPY below 138.40 at one stage. A small range only for it.

Japan's Nikkei 225 hit its highest since August 1990.

The big FX mover was the yuan. The People's Bank of China confirmed the mid-rate for the onshore yuan well above 7 for USD/CNY today. However, solid selling was seen in USD/CNH a little after, the market chatter (not confirmed) being Chinese state bank intervention to slow the yuan's decline. Chart below but, as I update, USD/CNH is even lower having dipped to circa 7.05 briefly.

Also from China, the Ministry of Finance is proposing to move its stakes in 3 firms managing bad debts into China's sovereign wealth fund (see bullets above).

Asian equity markets:

  • Japan’s Nikkei 225 +1%

  • China’s Shanghai Composite -0.5%

  • Hong Kong’s Hang Seng -1.4%

  • South Korea’s KOSPI +0.6%

  • Australia’s S&P/ASX 200 +0.6%

usdcnh intervention yuan china pboc 19 May 2023