- European Central Bank's Lane is speaking on getting to the inflation target today
- Deutsche says BoE will be forced to hike higher & further. Raise terminal forecast to 5.25
- Underlying inflation in Tokyo hit a 40 year high in May - recap
- BOJ Gov Ueda says targeting 5 year JGBs (from current 10yrs) is among options if needed
- Australia April Retail Sales 0.0% m/m (expected 0.3%)
- PBOC sets USD/ CNY reference rate for today at 7.0760 (vs. estimate at 7.0752)
- Japan announces further sanctions on Russia
- Japan Fin Min Suzuki says closely watching FX move, FX rates should be set by fundamentals
- A US official is reported as saying Biden and McCarthy near a debt limit deal
- China 'readout' of meeting with US Commerce Secretary
- US and China Commerce ministers met in Washington
- Japan Services PPI 1.6% (vs. expected 1.4%, prior 1.6%)
- RBNZ Assistant Governor Silk says the cash rate needs to stay on hold for an extended time
- Tokyo area CPI for May, headline 3.2% vs. 3.4% expected
- Fitch places Fannie Mae and Freddie Mac on rating watch negative
- Lloyd's Register drops ships of top Indian carrier of Russian oil
- US House Speaker McCarthy: "We do not have a deal on debt ceiling"
- Wall Street Journal reports: Big Banks Might Face Breakup, Top Regulator Says
- New Zealand data - May consumer confidence 79.2 (prior 79.3)
- Add more fuel to the AI boom - JP Morgan developing a ChatGPT-like service (CNBC report)
- Asia market holidays - Hong Kong is closed today
- Reserve Bank of New Zealand confirms it'll ease loan to value restrictions from June 1
- UBS on Novak's oil blooper Thursday
- Forexlive Americas FX news wrap: US dollar jumps as yields surge on debt ceiling
- US major indices close mixed. Dow closes down for the 5th day in a row. Nasdaq soars.
- New York City Banking Commission freezes NYC’s deposits at Capital One and KeyBank
- Trade ideas thread - Friday, 26 May 2023
We had more US debt limit talks Thursday evening US time and headlines to the effect that Biden and McCarthy were ‘near’ a debt limit deal. More on what this entails in the bullet point above. Yesterday Fitch placed the US on negative credit rating watch, today the firm did the same for US home lending facilitators Freddie Mac and Fannie Mae.
From Japan today we had Tokyo area inflation data for May. All three measures remained above 3%. The headline and ‘excluding fresh food’ indexes fell below their April results. However the index that excludes food and energy, known as core-core and the closest to the US measure of core inflation, rose from April to hit a 40 year high. Underlying price pressures remain worrisome despite the Bank of Japan continuing to insist that their forecasts show inflation is transitory. Also from Japan today were verbal intervention comments from finance minister Suzuki. He popped his head up to say he is closely watching FX moves and added that FX rates should be set by market based on fundamentals. This, of course, is in response to the rapid yen weakening we have seen.
Speaking of weakening, the People’s Bank of China stepped aside from supporting the yuan this week. The PBOC raised the USD/CNY reference rate today by another 230+ points to 7.0760. This is the weakest for CNY (i.e. highest for USD/CNY) since December 1 last year. For the week the central rate is up (i.e. weaker CNY) more than 600 points.
The US Commerce Secretary and Chinese Commerce Minister met. Both sides issued ‘readouts’ indicative of the two sides working together, at least in this sector and at this level.
Major FX traded in confined ranges. USD/JPY tested above 140.00 but is under there as I post. AUD, AUD, NZD, GBP, CAD are just a little firmer against the USD.
Asian equity markets:
Hong Kong markets were closed for a holiday today
Japan’s Nikkei 225 +1%
China’s Shanghai Composite -0.6%
South Korea’s KOSPI +0.3%
Australia’s S&P/ASX 200 +0.1%