MNI EUROPEAN OPEN: USD/JPY Tests ¥145

EXECUTIVE SUMMARY

• BOE's OUTGOING TENREYRO SAYS RECENT SPIKE IN RATES ENOUGH TO TAME INFLATION- BBG
• FEDS BOSTIC RETITERATES VIEW THAT RATES SHOULD STAY ON HOLD - BBG
• TOKYO CPI SUPPORTS EXPECTATIONS BOJ WILL RAISE INFLATION EXPECTATIONS - BBG
• CHINAS PURCHASING MANAGERS INDEX CONTRACTS FOR THIRD STRAIGHT MONTH- MNI

Fig. 1: USD/JPY Daily Spot

Source: MNI - Market News/Bloomberg

U.K.

BOE: Outgoing Bank of England rate-setter Silvana Tenreyro said the recent spike in market rates would be enough to bring UK inflation under control despite signs that price increases were becoming entrenched. (BBG)

NHS: Rishi Sunak unveiled his long-awaited plan to recruit record numbers of doctors and nurses, as he seeks to win back voters who blame his ruling UK Conservatives for the crisis facing the National Health Service. (BBG)

BUSINESS CONFIDENCE: UK business confidence rose to a 13-month high in June as firms shrugged off another Bank of England interest-rate increase, a survey by Lloyds Banking Group Plc found. (BBG)

EUROPE

ENERGY: The European Union will on Friday seek to resolve a deadlock between France and Germany over the role of nuclear energy in the bloc’s power market and pave the way for a deal on a key reform meant to help the shift to a low-carbon economy. (BBG)

UKRAINE: European Union leaders are trying to agree on steps to support Ukraine militarily over the longer term amid pressure to provide the government in Kyiv with additional security commitments and a clearer path on joining NATO. (BBG)

U.S.

FED: Federal Reserve official Raphael Bostic reiterated that he favors keeping borrowing costs on hold but that Chair Jerome Powell and other colleagues don’t agree with him. “There is time for us to wait and let our policy work,” Bostic said Thursday in Dublin. “I don’t see as much urgency to move as others, including my chair.” (BBG)

OTHER

BOJ: Bank of Japan Deputy Governor Ryozo Himino said a virtuous wage-price cycle existed, but doubted its sustainability, Mainichi Shimbun reported Friday. (BBG)

JAPAN: The European Union is making final preparations to lift the last of its import restrictions on Japanese food products imposed in the wake of the Fukushima nuclear disaster, Nikkei reports, citing an unidentified EU official. (NIKKEI)

INFLATION: Inflation in Tokyo re-accelerated for the second time in three months in June, an outcome that supports expectations the central bank will raise its inflation forecast next month. Consumer prices excluding fresh food increased 3.2% in the capital from a year earlier, rising at a slightly faster pace than last month’s revised figures, according to the ministry of internal affairs Friday. (BBG)

JAPAN: Japan's industrial production fell 1.6% m/m in May for the first drop in four months, following 0.7% in April, due to weaker production for motor vehicles, electrical machinery and information, and communication electronics, the Ministry of Trade and Industry said Friday. The weak May data will not prompt the Bank of Japan to change its view that industrial production has been more or less flat, as it expects June production to rise. (MNI)

AUSTRALIA: The Australian government has fast-tracked funding for essential infrastructure damaged by natural disasters.Kristy McBain, the minister for regional development, on Friday announced that local government areas across the country will be able to access 1.8 billion Australian dollars (1.1 billion U.S. dollars) in funding to repair roads, bridges and other infrastructure assets damaged by floods and bushfires in recent years. (BBG)

AUSTRALIA/EU FTA: The European Union has failed to offer Australia satisfactory terms to seal a free-trade accord, Trade Minister Don Farrell said, as small but important sticking points threaten to derail plans to sign by the end of August. EU Trade Commissioner Valdis Dombrovskis said Wednesday evening in Brussels that it’s possible the agreement could be signed at a NATO summit in Lithuania in mid-July, the Australian Financial Review reported. The five-year negotiations between the bloc and Canberra are in their “end-game,” he told reporters, adding there is still “certain ground to be covered.” (BBG)

AOFM: The Australian Office of Financial Management plans to issue a new June 2054 Bond in the December quarter, according to an emailed statement. (BBG)

CHINA

PMI: China's Purchasing Managers' Index contracted for the third straight month, registering 49 in June, rebounding slightly from 48.8 in May though still below the breakeven 50 mark, data from the National Bureau of Statistics showed Friday. (MNI)

GOVT DEBT: China should establish a government debt repayment reserve fund to prevent default risks, according to a report published by the National People's Congress Financial and Economic Affairs Committee on Thursday. The balance of local government special bonds has exceeded CNY22 trillion after years of expansion in infrastructure projects, while the repayment risks increased with declining revenues from land sales in recent years. China should raise the warning line of the local government debt ratio to 150%, as the current ratio has exceeded 120% in many regions, said Zhao Quanhou, a researcher at the Chinese Academy of Fiscal Sciences. (MNI)

FREE TRADE ZONES: China will introduce new measures to promote the high quality opening up of free trade zones (FTZs), according to recent plans from the State Council. Officials said China will expand the scope of financial services that foreign firms can provide within FTZs, and widen tariff exemption rules for various products and services. Foreign firms will benefit from harmonized treatment for government procurement projects and a relaxation of business and spouse visas. The State Council said authorities would take targeted measures to boost residents' consumption, and coordinate cross government policy for renovating old age housing. (MNI)

BEIJING/HK: Officials from the Beijing and Hong Kong stock exchanges have signed an agreement to facilitate the listing of companies across platforms, according to a joint statement. Policymakers said Beijing listed firms will benefit from improved access to international capital markets and can further develop as a center for international science and technology innovation. Hong Kong will further enhance its status as an international financial hub and gateway to China’s capital market, officials said. (MNI)

REFORM: Flagging market-oriented reform to boost the confidence of entrepreneurs, rather than relying on policy stimulus, should be a top priority for Chinese policymakers, as economic pain stemming from Covid persists and relations with the U.S. remain troubled, a prominent liberal economist told MNI in an interview. (MNI)

PBOC: China took steps to slow a decline in the yuan for a fourth time this week, as its weakness intensified on souring sentiment toward the world’s second-largest economy. (BBG)

CHINA MARKETS

PBOC Injects Net CNY103 Bln Via OMOs Friday

The People's Bank of China (PBOC) conducted CNY103 billion via 7-day reverse repos on Friday, with the rates at 1.90%. The operation has led to a net injection of CNY103 billion as no reverse repo is maturing today, according to Wind Information.

• The operation aims to keep banking system liquidity stable at half year end, the PBOC said on its website.
• The 7-day weighted average interbank repo rate for depository institutions (DR007) rose to 1.9321% at 09:33 am local time from the close of 1.9041% on Thursday.
• The CFETS-NEX money-market sentiment index closed at 47 on Thursday, compared with the close of 46 on Wednesday.

PBOC Yuan Parity Higher At 7.2258 Friday VS 7.2208 Thursday

The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.2258 on Friday, compared with 7.2208 set on Thursday.

OVERNIGHT DATA

South Korea May Industrial Production 3.2% M/M; Prior -1.2%

South Korea May Cyclical Leading Index Change 0.0; Prior -0.2

UK Jun Lloyds Business Barometer 37; Prior 28

Japan Jun Tokyo CPI 3.1% Y/Y; Prior 3.2%

Japan Jun Tokyo CPI Ex-Fresh Food 3.2% Y/Y; Prior 3.1%

Japan Jun Tokyo CPI Ex-Fresh Food, Energy 3.8% Y/Y; Prior 3.9%

Japan May Jobless Rate 2.6%; Prior 2.6%

Japan May, P Industrial Production -1.6% M/M; Prior 0.7%

Australia May Private Sector Credit 0.4% M/M; Prior 0.6%

China Jun Composite PMI 52.3; Prior 52.9

China Jun Mfg PMI 49.0; Prior 48.8

China Jun Non-Mfg PMI 53.2; ; Prior 54.5

MARKETS

Date	GMT/Local	Impact	Flag	Country	Event
30/06/2023	0600/0700	***		UK	GDP Second Estimate
30/06/2023	0600/0700	*		UK	Quarterly current account balance
30/06/2023	0600/0800	**		DE	Import/Export Prices
30/06/2023	0600/0800	**		DE	Retail Sales
30/06/2023	0630/0830	**		CH	Retail Sales
30/06/2023	0645/0845	***		FR	HICP (p)
30/06/2023	0645/0845	**		FR	PPI
30/06/2023	0645/0845	**		FR	Consumer Spending
30/06/2023	0700/0900	*		CH	KOF Economic Barometer
30/06/2023	0755/0955	**		DE	Unemployment
30/06/2023	0900/1100	***		EU	HICP (p)
30/06/2023	0900/1100	**		EU	Unemployment
30/06/2023	1230/0830	***		CA	Gross Domestic Product by Industry
30/06/2023	1230/0830	**		US	Personal Income and Consumption
30/06/2023	1342/0942	**		US	MNI Chicago PMI
30/06/2023	1400/1000	**		US	U. Mich. Survey of Consumers
30/06/2023	1430/1030	**		CA	BOC Business Outlook Survey
30/06/2023	1500/1100			CA	Finance Dept monthly Fiscal Monitor (expected)
30/06/2023	1600/1200	***		US	USDA Acreage - NASS
30/06/2023	1600/1200	**		US	USDA GrainStock - NASS