US STOCKS: S&P-Continues To Trade Well Considering Pullback In Semiconductors/AI

USD/JPY tracks near 160.00 in early Wednesday dealings, with all eyes on whether we can sustain a break above this level or whether the authorities respond with fresh intervention. Levels wise 160.72 is the Apr 30 high for the pair and bull trigger. The 50-day EMA support point is back around 158.50. We have already had headlines from FinMin Katayama cross this morning, where she stated they will respond to forex moves as needed. 

• The risk/reward around fresh intervention at current levels may not be that high, given broader USD gains are in play amidst higher oil futures as US/Iran trade fresh strikes near Hormuz and neighboring countries.
• Still, the market will likely be sensitive to any comments from the nation’s top currency official, Atsushi Mimura. As a reminder, it was the “final” warning from Mimura that preceded record levels of actual intervention, just hours after the remarks.
• Also note Citi’s broad real effective exchange rate for the yen is around new cycle lows, which may already be ringing alarm bells.
• The other focus point today will be BOJ Governor Ueda’s speech, given there could be clear hints relating to the BOJ’s bias into the June meeting. A 25bps hike is close to 89% priced in for that meeting. Ueda's speech will start around 1730 JST (0830 GMT) per our onshore policy team.
• Locally, via BBG: "Japan’s cabinet approved a $19.4 billion extra budget to fund measures meant to cushion households from inflation tied to Middle East turbulence... The cabinet also approved a plan to fund the package that will require new debt financing. Despite the additional borrowing, the government will manage to keep total bond issuance unchanged on a calendar basis, as some debt authorized under last fiscal year’s budget will be canceled, the plan showed." 

NZD/USD tracks near 0.5920 in latest dealings, down slightly from end Tuesday levels. The early Wednesday tone is risk off in markets, as oil rises on fresh tit for tat strikes involving the US and Iran. Missiles have been launched at Bahrain and Kuwait, after earlier Iran's Qeshm island was struck. For NZD, recent lows rest at 0.5911, while the 20-day EMA is near 0.5905. The 200-day support point is further south at 0.5870. Earlier May lows were at 0.5815. 

• US equity futures are lower, but away from worst levels. Sentiment for risk currencies likely to be dictated by US/Iran developments in the near term.
• Locally for NZ, via BBG: 'The RBNZ will raise the Official Cash Rate in July and September, the NZ Institute of Economic Research says in its Quarterly Economics Predictions report published Wednesday in Wellington."
• On the data front we had the Q1 terms of trade earlier, which fell 2.0%q/q, after a Q4 gain of 3.7%. Overnight we had a 2.2% decline in the fortnightly whole milk powder auction price, but trends are fairly steady in recent months.
• Also note, April building permits surged 10.9%m/m, after a revised -0.8% decline in March. 

** Corrected Rtrs headline below: see final headline below 

US and Iran now confirming the earlier headlines around likely tit for tat strikes. See below. Risk sentiment is trading softer, but we are away from worst levels for US equity futures, while oil futures sit off session highs (WTI back under $95/bbl). 

*US: IRAN LAUNCHED SEVERAL BALLISTIC MISSILES TOWARD NEIGHBORS
*US: FORCES SUCCESSFULLY DEFEATED MULTIPLE IRAN MISSILES
*US FORCES CONDUCTED SELF-DEFENSE STRIKES ON QESHM ISLAND
*US: FORCES SHOT DOWN 3 ONE-WAY ATTACK DRONES LAUNCHED BY IRAN" - BBG

"U.S. CENTRAL COMMAND: TWO IRANIAN MISSILES FIRED AT KUWAIT FELL SHORT OR BROKE APART EN ROUTE

U.S. CENTRAL COMMAND: THREE MISSILES LAUNCHED AT BAHRAIN WERE INTERCEPTED BY U.S. AND BAHRAIN FORCES" RTRS" 

"IRAN'S IRGC SAYS IT ATTACKED U.S. FIFTH FLEET HEADQUARTERS WITH MISSILES AND DRONES -IRANIAN MEDIA - [RTRS]"

"IRAN'S IRGC SAYS ATTACK IN RESPONSE TO U.S. TARGETING COMMUNICATIONS TOWER OF IRGC IN SOUTH OF QESHM ISLAND (NOT ATTACK ON TANKER) (CORRECTED) - [RTRS]"