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A pretty busy day for Asian session traders, as they price in headlines from the previous sessions as well as a few developments from the BOJ and the Korean peninsula.

  • BOJ trims JGB purchases
  • Australia’s AIG manufacturing index dips from 58.3 to 57.5
  • New Zealand’s quarterly trade index drops by 1.9% vs. 2.0% dip expected, 1.5% growth in Q4 2017
  • Japan’s final manufacturing PMI revised higher from 52.5 to 52.8 in April
  • China’s Caixin manufacturing PMI remains at 51.1 vs. 51.3 expected

Major Events/Reports:

BOJ cuts JGB purchases

The Bank of Japan (BOJ) made headlines earlier today when it unexpectedly cut its bond purchases for the first time since February.

The central bank only bought 430B JPY worth of debts maturing in 5-10 years, 20B JPY lower than the previous 450B JPY figure.

What’s interesting about the decision is that it didn’t boost the yen as it would have done a couple of months ago. For now, analysts are calling today a win for Kuroda and his team, who have been busy communicating that reducing bond purchases does NOT mean tightening their policies.

More progress in the Korean peninsula

Earlier today a South Korean official revealed that North Korea had proposed a joint celebration of a historic 2000 inter-Korean summit in the South.

The official added that North Korea had suggested that officials, politicians and private sector members from both sides should take part in the joint celebration.

Meanwhile, South Korea proposed a joint liaison office in the North Korean border city of Kaesong where the Koreas operated a factory until 2016.

The progress was a welcome one given that North Korea had canceled a meeting just last month over South Korea’s air combat drills with the U.S.

Mixed reaction to Trump’s tariffs

As mentioned in the US session recap, the Trump administration went ahead and imposed additional aluminum and steel tariffs on the Canada, Mexico, and the EU.

Nikkei was unscathed by the news thanks in part to the BOJ cutting its bond purchases, but other Asian bourses weren’t so lucky.

  • Nikkei is up by 0.09% to 22,222.1
  • A SX 200 is down by 0.35% to 5,986.7
  • Shanghai index is down by 0.53% to 3,079.160
  • Hang Seng is down by 0.17% to 30,417.4

Overall risk aversion also pushed the safe-haven gold higher while crude oil was dragged lower by the Energy Information Administration (EIA) reporting record-high U.S. crude oil production in May. This comes on top of speculations that Saudi Arabia and Russia are also set to up their production game.

  • Gold is up by 0.04% to $1,298.40
  • Brent crude oil is down by 0.23% to $77.40
  • U.S. WTI is down by 0.28% to $66.84

Major Market Mover(s):

AUD

The Aussie was hit by a one-two punch of lower-than-expected Caixin manufacturing PMI and a bit of risk aversion in the markets.

AUD/JPY is down by 17 pips (-0.21%) to 81.45
AUD/NZD is down by 22 pips (-0.20%) to 1.0851
GBP/AUD is up by 34 pips (+0.19%) to 1.7681

CHF

There were no catalysts to support the move save for a bit of profit-taking, but the low-yielding franc actually traded LOWER against most of its counterparts.

NZD/CHF is up by 20 pips (+0.29%) to .6861
GBP/CHF is up by 31 pips (+0.23%) to 1.3162
CHF/JPY is down by 30 pips (-0.27%) to 109.40

USD

The Greenback was able to hold its ground during the session despite fears of escalating trade wars between the U.S. and its trading counterparts.

EUR/USD is down by 8 pips (-0.07%) to 1.1682
GBP/USD is down by 30 pips (-0.23%) to 1.3263
USD/JPY is up by 33 pips (+0.30%) to 109.13
USD/CHF is up by 20 pips (+0.20%) to .9933

Watch Out For:

  • 6:30 am GMT: Australia’s commodity prices (y/y)
  • 7:15 am GMT: Spain’s manufacturing PMI (53.9 expected, 54.4 previous)
  • 7:30 am GMT: Switzerland’s manufacturing PMI (62.3 expected, 63.6 previous)
  • 7:45 am GMT: Italy’s manufacturing PMI (53.0 expected, 53.5 previous)
  • 7:50 am GMT: France’s final manufacturing PMI to remain at 55.1?
  • 7:55 am GMT: Germany’s final manufacturing PMI expected to maintain 56.8 reading
  • 8:00 am GMT: No changes expected from Euro Zone’s 55.5 manufacturing PMI
  • 8:30 am GMT: U.K.’s manufacturing PMI (53.5 expected, 53.9 previous)