ForexLive Asia-Pacific FX news wrap: USD/JPY hit its highest since May 1

• Federal Open Market Committee (FOMC) May meeting minutes – “a decidedly hawkish tone”
• Federal Reserve Bank of Atlanta President Bostic speaks Thursday
• Heads up for US Treasury Secretary Yellen to speak in Europe on Thursday
• New Zealand Fin Min says government deficit expected to be larger in 2025 than 2024
• Shenzhen Stock Exchange suspends trading of China’s ultra-long special treasury bonds
• Chinese People’s Liberation Army (PLA) started joint military drills surrounding Taiwan
• The Bank of Japan left its JGB buying amounts the same as the previous operation
• PBOC sets USD/ CNY reference rate for today at 7.1098 (vs. estimate at 7.2451)
• Australian data – Consumer Inflation Expectations for May 2024: 4.1% (prior 4.6%)
• South Korea leaves base rate at 3.5% (as expected)
• UK’s Secretary of Defence Shapps says British intelligence now has evidence of China lying
• Singapore central bank official says current policy settings remain appropriate
• Japan preliminary May manufacturing PMI 50.5 (prior 49.6)
• 3 reasons the Bank of Canada will begin a cascade of rate cuts, first in June
• RBNZ Gov. Orr says the Bank can begin easing before inflation comes down to 2%
• Deutsche Bank like USD higher but 2 key risks (data downturn and politics – you know who)
• Reuters survey of Japanese firms: Almost half of firms see USD/JPY above 155 as a negative
• Australian May preliminary manufacturing PMI 49.6 (prior 49.6)
• 3 reasons Nomura remain bearish and short on the Chinese yuan
• New Zealand retail sales Q1 +0.5% q/q (expected -0.3%)
• Hotter UK inflation chills BoE June rate cut prospects – base case cut August
• US equity indexes have jumped upon reopening (Globex) – NVDA beat and beat and beat
• ICYMI – Goldman Sachs CEO Solomon says Fed unlikely to cut rates this year
• Forexlive Americas FX news wrap 22 May: Fed Minutes are more hawkish (but old)
• Russian Energy Ministry says Russian oil production was slightly above agreed to target
• RBNZ Governor Orr said the biggest risk we run is not getting inflation low and stable
• New Zealand Finance Minister Willis says the government is working to cut inflation
• More from ECB’s Schnabel – says wage growth is slowing gradually
• Nvidia earnings beat. Announces 10:1 stock split
• US stocks closed lower ahead of Nvidia earnings
• Trade ideas thread – Thursday, 23 May, insightful charts, technical analysis, ideas

USD/JPY
crawled a little higher again during the Tokyo morning session,
hitting 156.90 and its highest since May 1 (when
it was slammed lower in another bout of intervention).
Information flow from Japan today included the preliminary PMIs for
May, showing Manufacturing moving into expansion for the first time
in a year. We also had the Bank of Japan with a Japanese Government Bond
buying operation. Yields on the 10yr traded above 1% this week, so
the BOJ is unlikely to trim back its buying of JGBs again any time soon.

Reserve
Bank of New Zealand Governor Orr spoke again, communicating his
message more widely from the Bank’s Statement and his press
conference on Wednesday. Most notably, Orr said the Bank can begin
easing before inflation falls to 2%. Finance Minister Willis also
spoke, promising fiscal restraint but indicating next year’s
deficit would be larger than this year’s. NZD/USD has gained ground on
the session, back towards 0.6120.

Singapore
announced stronger growth figures, while its central bank, the
Monetary Authority of Singapore, said current policy settings were
appropriate.

China’s
military began military drills surrounding Taiwan, boasting of
weaponry it
could use to eliminate
“Taiwan independence secessionists” and
warning off “interference and provocation by external forces”.
Chinese markets sold off. I’ll leave it to others to debate if the
two are connected but given foreign investor wariness of China’s
politics and economic policies at present its not difficult to see
some connection at least. But of course you can’t count out the hawkish FOMC MInutes and market response on Wednesday leading in either.

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