USD/JPY tested 159.00, comments were seen from various Japanese officials

Asia market uUpdate: USD/JPY tested ¥159, comments were seen from various JP officials ; Focus on EU/UK/US PMIs, UK May Retail Sales; BOJ Jun Summary of Opinions due on Mon.

General trend

- JPY has kept falling against all major currencies this week, once again breaking below the 159 handle against USD, the lowest since reverse-spiking to 160 at end of April (and just before Japan MOF intervention which took it back to ~155).

- Little market reaction seen from Japanese macro data.

- China banks said to have sold USD after yuan fixing on Fri – US financial press.

- Australian Manufacturing PMI came in well below 50 to its lowest level in 3 months. Incoming new orders declined across both the manufacturing and service sectors for the first time since January. Elevated interest rates and subdued economic conditions were often mentioned by survey panelists as reasons for the deterioration in demand.

- Asian equities trade mixed.

- Chinese equities have lagged; Trade has been a focal point; Japan confirms imposes fresh sanctions on China-based co's. related to Ukraine war – Press [ Co's include Yilufa Electronics and Shenzhen 5G Night-tech Innovation co].

- Reportedly China govt authorizes small banks in northeast China to facilitate Russia payments; the 2 countries said to find workaround to US sanctions – press.

- Canada said to be preparing tariff plan against Chinese EV's - financial press.

- Shares of Evergrande affiliates rise: Evergrande NEV gains >40%, Evergrande Property Services rises >17% [Reminder from May 28th: Evergrande: Trading in shares to remain suspended until further notice; Liquidity and internal resources remain limited].

- SoftBank Group reversed gains; The co’s CEO continued to make comments..

Looking ahead (Asian time zone)

- Fri 21st Jun: (Fri eve UK May Retail Sales, DE & EU & UK prelim Mnfg PMI Flash. Fri night CA Apr Retail Sales, US S&P Jun prelim Mnfg PMI).

Holidays in Asia this week

- Monday June 17th India, Indonesia, Malaysia, Philippines, Singapore.

- Tuesday June 18th Indonesia.

- Wed June 19th (Note: Wed 19th US time is a US holiday).

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,772.

- Australia jun preliminary pmi manufacturing: 47.5 V 49.7 PRIOR (lowest in three months).

- Australia sells A$700M vs. A$700M indicated in 1.50% Jun 2031 bonds; Avg Yield: 4.0954% v 4.2149% prior; bid-to-cover 2.99x v 3.18x prior.

China/Hong Kong

- Hang Seng opens -0.7% at 18,199; Shanghai Composite opens -0.2% at 2,998.

- (RU) Reportedly China govt authorizes small banks in northeast China to facilitate Russia payments - press.

- (US) Treasury Sec Yellen: US tariffs on China overcapacity are highly strategic - Speaking in Atlanta.

- China Housing Ministry: Urging local govts to accelerate buying unsold homes - State TV [overnight update].

- China PCA sees June Retail Passenger Vehicle Sales -7.6% y/y v -3.0% y/y prior month; Sees NEV sales +32.7% y/y – press [overnight update].

- China Commerce Ministry (MOFCOM): Calls US to cancel tariff on battery imports [overnight update].

- China reportedly requires banks that do not operate wealth management subsidiaries to "clean-up" existing wealth business by end of 2026 - Chinese press, citing sources [overnight update].

- China PBOC sets Yuan reference rate: 7.1196 v 7.1192 prior.

- China PBOC Open Market Operation (OMO): Sells CNY10B in 7-day reverse repos; Net injects CNY8B v net injects CNY18B prior.

- China sells 30-year special Treasury Bonds; Avg Yield: 2.4681% v 2.5319% prior.

- In Mar, US and China held first informal nuclear talks in 5 years – financial press.

Japan

- Nikkei 225 opens -0.1% at 38,608.

- Japan May national CPI Y/Y: 2.8% V 2.9%E; CPI ex-fresh food (CORE) Y/Y: 2.5% V 2.6%E (Above BOJ target for 26 straight months).

- Japan Jun preliminary Manufacturing PMI: 50.1 V 50.4 prior.

- Japan METI / Japan Econ Min Saito: More companies are asking for price hikes to cover labor costs - Japanese press.

- Japan top FX diplomat Kanda: FX intervention has been effective; Will take proper action on FX if needed – press.

- Japan Fin Min Suzuki: To attend Japan-South Korea Finance Ministers meeting in Seoul on Jun 25th - Japanese press.

- Japan Chief Cab Sec Hayashi: Reiterates addition of Japan to US currency monitoring list does not mean that Japan's FX policy is a problem - Japanese press.

- Japan Top FX diplomat Kanda: Reiterates will respond to excessive FX moves; There is no limit for FX intervention resources [overnight update].

- Norinchukin bank: No extra capital raising is needed [overnight update].

- Japan to hold talks on raising the minimum wage on Jun 25th - Japanese press.

- Japan PM Kishida to resume utility and gasoline subsidies [inline] - Japan press.

- (US) Treasury semi-annual currency report: Seven economies are on Treasury’s “Monitoring List” of major trading partners that merit close attention to their currency practices and macroeconomic policies: China, Japan, Malaysia, Singapore, Taiwan, Vietnam, and Germany; The yen depreciated more than 6% against the U.S. dollar in 2023 and has depreciated nearly 11% in 2024 as of end-April. On a real effective basis, the yen depreciated 5.5% in 2023, adding to the 11.5% depreciation in 2022, and currently sits at a 50-year low. The depreciation is consistent with the wide interest rate differentials between the United States and Japan resulting from their divergent monetary policies.

South Korea

- Kospi opens -0.5% at 2,794.

- South Korea Jun 1-20th Exports Y/Y: 8.5% v 1.5% prior; Imports Y/Y: -0.6% v -9.8% prior.

- South Korea May PPI Y/Y: 2.3% v 1.9% prior (update).

- (Follow up): South Korea Central Bank (BOK) confirms with National Pension Fund to expand FX swap deal to $50B through year end - Korean press.

- South Korea said to reconsider issue of supplying weapons to Ukraine – press [overnight update].

Other Asia

- Indonesia central bank (BI) leaves bi rate unchanged at 6.25%; as expected [overnight update].

- (VN) Russia Pres Putin: Russian companies are ready to invest in LNG projects in Vietnam [overnight update].

- Philippines Central Bank (BSP): Inflation to remain within 2-4% target range in 2024 and 2025 [overnight update].

- Taiwan May export orders Y/Y: 7.0% V 6.2%E; Sees June export orders to accelerate to +10.9-15.4% y/y [overnight update].

-Thailand PM: To announce measures to support the equity market next week; Fin Min to discuss inflation target review with central bank.

North America

- (CA) Canada said to be preparing tariff plan against Chinese EV's - financial press.

- (US) Fed's Goolsbee (non-voter for 2024): If we see more good inflation reports then we can't cut rates.

- (US) Fed’s Barkin (voter): There is no question that frothy asset markets are supportive of spending.

- (US) Fed's Kashkari (non-voter): Wage growth might still be a bit too high to get back to 2% right now.

- (US) Treasury semi-annual currency report: no major trading partners manipulated currency.

- (US) Reportedly US bank regulators still arguing over the path forward for rules easing bank capital hikes; Some wanting to allow additional feedback from Wall Street after the industry vigorously pushed back - press.

- (US) May housing starts: 1.277M V 1.370ME (lowest since June 2020); building permits: 1.386M V 1.450ME (lowest since Jan 2023).

- (US) Q1 current account: -$237.6B V -$206.0BE.

- (US) Initial jobless claims: 238K V 235KE; continuing claims: 1.83M V 1.80ME (highest since early March).

- (US) Jun Philadelphia Fed business outlook: 1.3 V 5.0E; Prices Paid: 22.5 v 18.9 prior; New Orders: -2.2 v -7.9 prior.

- (US) Atlanta Fed GDPNow: Cuts Q2 GDP forecast to 3.0% from 3.1%.

- (US) DOE CRUDE: -2.55M V -2ME; GASOLINE: -2.2M V 0ME; DISTILLATE: -1.7M V 0ME.

- (US) May Net trailer orders 5.7K units, -56% m/m, -14% y/y; Driven by a substantial drop in gross orders coupled with the sustained high level of cancellations - FTRintel.com.

- Fed’s Daly [voter] does not comment on monetary policy.

- Former Fed official Bullard: US growth outlook remains 'robust'; expects the pace of rate cuts will be 'slow'.

- TTN Research Alert: Around $5.5T options expiration on Fri, June 21st (v $5T in similar event in Dec 2023) set to be nominally largest on record for US main indices' derivatives, although % of market impacted is likely lower than Dec's ~80%; Options expiration coincides with index rebalancing.

Europe

- (UK) Jun GfK Consumer Confidence: -14 v -17 prior (highest since Nov 2021).

- (UK) Bank of England (BoE) leaves bank rate unchanged at 5.25%; as expected; Some members** played down threat from services inflation and wages.

- (UK) BoE June minutes: voted 7-2 to hold rates; Dhingra and Ramsden remain dovish dissenters calling for 25bps cut.

- (EU) Eurozone jun advance consumer confidence: -14.0 V -13.8E.

- (RU) Russian Pres Putin: Reiterates mulling possible changes to nuclear doctrine, citing possible changes related to lowering the threshold for use of nuclear weapons in the West.

Levels as of 01:20 ET

- Nikkei 225, flat, ASX 200 +0.2% , Hang Seng -1.7%; Shanghai Composite -0.3% ; Kospi -0.8%.

- Equity S&P500 Futures: +0.1%; Nasdaq100 +0.2%, Dax flat; FTSE100 +0.1%.

- EUR 1.0719-1.0701 ; JPY 159.12-158.81 ; AUD 0.6669-0.6653 ;NZD 0.6140-0.6115.

- Gold +0.3% at $2,376/oz; Crude Oil flat at $81.25/brl; Copper -0.6% at $4.5380/lb.