ForexLive Asia-Pacific FX news wrap: China’s manufacturing PMI back into contraction

• European Central Bank’s Panetta speaking Friday
• More on the disappointing China manufacturing PMI for May – fell back into contraction
• Federal Reserve Bank of Atlanta President Raphael Bostic is speaking on Friday, late
• US inflation (PCE) data due Friday – here are the critical ranges to watch
• Australian April 2024 Private Sector Credit +0.5% m/m (expected +0.4%)
• China May 2024 Official Manufacturing PMI 49.5 (expected 50.5)
• PBOC sets USD/ CNY reference rate for today at 7.1088 (vs. estimate at 7.2383)
• Japan will release its forex intervention data today, Friday, 31 May 2024.
• Japan finance minister Suzuki says FX stability is important
• Japan April Retail Sales +2.4% y/y (expected +1.9%)
• Japan April Industrial Output -0.1% m/m (expected +0.9%)
• Tokyo area May inflation data: Headline 2.2% y/y (prior 1.8%)
• UK data – Lloyds Bank business sentiment index hits its highest since November 2015
• Reports that OPEC+ is working on a deal to extend some oil production cuts into 2025
• Deutsche Bank on yields rising – “bad news” for risk assets across the globe
• Major FX little changed after Trump guilty verdict
• More Fed’s Logan – worried about an energy price shock disrupting inflation expectations
• Donald Trump convicted – found guilty
• Fed’s Logan: Too soon to think about rate cuts
• HSBC on recent China policy support, reason to tentatively buy mainland & Hong Kong stocks
• Forexlive Americas FX news wrap: US dollar gives some back
• Trade ideas thread – Friday, 31 May, insightful charts, technical analysis, ideas

The
major news of the session was the inflation data from Tokyo (OK, the
other major news is way down the page, where it belongs). The Tokyo
CPI accelerated
in May. The
national level CPI data will come along in around three weeks and if it
follows suit (the Tokyo data is usually not too different from the
national numbers) it’ll keep the
Bank of Japan pretty
much
on track to consider a further
rate
hike in the
months
ahead.
Note that the BoJ do not seem to be in too big a rush for the next
hike.

Other
data from Japan was mixed. Industrial production dropped in April, a
surprise. Retail Sales moved ahead with a strong beat.

We
had yen supportive comments from Japanese finance minister Suzuki
today, he gave the yen a bit of a boost.

The
other main data of focus were PMIs from China. These were the
National Bureau of Statistics (NBS) PMIs, the official ones. While
the Services PMI dipped a touch it remained in expansion. The
manufacturing PMI, on the other hand, showed a very poor result,
dropping to a three-month low and back into contraction at 49.5. It’s
a bumpy recovery in China for sure. Stay tuned for the privately
surveyed Caixin PMIs to follow next week, manufacturing on Monday and
services on Wednesday.

Major
FX was mixed. The dollar strengthened against EUR and GBP, while
NZD/USD rose. AUD and CAD were fairly flat.

USD/JPY
dribbled down to lows around 156.60 after the data and Suzuki, but has
since recovered to around the middle of its session range around
156.78 as I post.

Don’t
forget, and be prepared, US inflation data is still to come:

• US inflation (PCE) data due Friday – here are the critical ranges to watch

And,
before that, something interesting:

• Japan will release its forex intervention data today, Friday, 31 May 2024.

***

There
is going to be no escaping the US election saga in the months ahead.
Today’s bombshell was that Donald
Trump was found guilty in his criminal trial in New York. In summary:

• Trump
  is the first
  US
  president
  to be convicted of a felony
• He
  was found guilty
  on all 34 counts of falsifying business records to commit election
  fraud
• Jurors
  were unanimous on all counts
• The
  case
  centered
  on hush money payments to porn actress Stormy Daniels
• Sentencing
  will
  be on
  July 11
• Potential
  sentence is from nothing to up to 4 years in prison

Those
are all facts, if you’d like speculation on what’s ahead, much of
it ill-informed and partisan, there is plenty about. Or, you could
just have a good weekend.

This article was written by Eamonn Sheridan at www.forexlive.com.