The
Australian dollar took a hit during the session on the release of May
2023 monthly inflation data. This came in at 5.6%, well below the
6.1% consensus mid-point estimate. Core measures for the month
remained above 6% but it was the headline that the market responded
to, immediately marking down the AUD. While the monthly CPI print has
caveats, the data does not cover the entire ‘basket’ that the
quarterly CPI does for example, we don’t get the more reliable
quarterly data until late in July. The Reserve Bank of Australia meet
next week, July 4, and it would appear the data today is enough for
the Bank to leave its cash rate unchanged at this meeting.
While
AUD/USD lost ground sharply there losses against the USD also for
NZD, CAD, EUR, GBP and CHF, so it wasn’t entirely an AUD story.
From
China today we had
- the
People’s Bank of China setting the CNY reference rate nearly bang
on 7.21, keeping offshore yuan well off its lows of the week - further
slumping industrial profits data, for May. While these were not as
weak as in April they were still negative y/y
USD/JPY
is little changed on the session. We had some yen-supportive remarks
from Japan’s Finance Ministry’s Vice Finance Minister for
International Affairs Kanda. He is the guy who will instruct the BOJ
to intervene, when he judges it necessary and is often referred to as
Japan’s ‘top currency diplomat’. USD/JPY dipped under 143.80 but has
since traded back up above 144.00.
Earlier
in the session the Wall Street Journal reported that the Biden
administration is considering new restrictions on exports of
artificial intelligence chips to China. This kept NQ well away from
the highs it managed on Tuesday, US time, and weighed on tech stocks
in China also.
As
I post oil prices are firming a touch, with WTI futures heading
towards $68. During the US afternoon the privately surveyed inventory
data showed a larger than expected headline crude draw.
Asian
equity markets:
-
Japan’s
Nikkei 225 +0.9% -
China’s
Shanghai Composite -0.6% -
Hong
Kong’s Hang Seng -0.2% -
South
Korea’s KOSPI -0.5% -
Australia’s
S&P/ASX 200 +1%
Tracking NQ on Globex:
(This
chart is from our charting app, which is free and can
be found at this link)