KRW: Spot USD/KRW Finds Support Ahead Of 1350, But Risks Remain Skewed Lower
Spot USD/KRW finished up at 1356.3 in Thursday trade, a won gain of 0.93%, amid broader on-going USD weakness. Intra-session lows from Thursday were at 1351.6. This region has marked lows for the pair on a number of occasions so far in June, which suggests some near term support. Highs yesterday were close to 1371.
- KRW saw positive spill from TWD gains yesterday, with both currencies seen benefiting from increased hedging by local investors and the broader shift from USD denominated assets. THis appeared to pick up yesterday following Trump's unilateral tariff remarks.
- For spot USD/KRW focus will remain on a downside break of 1350. Middle East tensions may raise risk aversion in the near term, but the trend still favors USD/KRW downside.
- Nomura stated yesterday (via BBG) that it no longer expects a 25bps BoK cut, due to the strength of the housing market and hawkish rhetoric from BoK Governor Rhee (caution around further rate cuts in recent remarks).
- We had stronger lending to household data earlier this week, while the Finance Minister said yesterday that South Korea will tap all available tools to cool the housing market (BBG).
- Today, President Lee will meet with the heads of 5 major Chaebols, including Samsung. The Finance Ministry also releases its monthly economic report.
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MNI: JAPAN APRIL CORP GOODS PRICE INDEX +4.0% Y/Y; MAR +4.3%
- MNI: JAPAN APRIL CORP GOODS PRICE INDEX +4.0% Y/Y; MAR +4.3%
- JAPAN APRIL CORP GOODS PRICE INDEX +0.2% M/M; MAR +0.4%
NEW ZEALAND: Card Spending Trends Remain Mostly Soft
New Zealand April card spending was -0.2m/m for total, after a revised -1.6% fall in March (originally reported as -1.5%). For retail card spending we flat in April, after a -0.8%m/m fall in March. The trend around m/m spending momentum has been mostly negative since the start of the year. The net migration estimate eased to +2480k for March, from +4040 in Feb. Annual net migration was +26531k as at end March.
- For retail card spending, core retail rose 0.2%m/m after falling 0.8% in March. Durables were up 0.1%, while consumables rose 0.5%, apparel was off 1.9%. Fuel and vehicle related spending were both down over 2%.
- In y/y terms the biggest falls were for fuel and vehicles (ex fuel). Only consumables recorded a decent y/y rise of 3%.
JGBS: Futures Little Changed With US Tsys After US CPI
In post-Tokyo trade, JGB futures closed little changed, -1 compared to settlement levels, after US tsys finished Tuesday's NY session little changed.
- There is little in this report alone to suggest a meaningful gap between CPI and PCE-in other words, the slight downside miss in core CPI doesn't carry a major re-interpretation for PCE via the components. Note that the April core PCE consensus was 0.24% M/M coming into today, and while this may dip slightly, we doubt forecasts will be radically changed (core CPI came in at 0.22% M/M).
- The greenback has weakened, eroding a solid portion of the prior session advance. Amid the continued bid for major equity indices, the US dollar traded in a more typical manner with risk, weakening against most G10 peers.
- "Nippon Life is looking to reduce its holdings of Japanese government bonds and is seeking investment opportunities in other areas, such as sovereign bonds in Europe and Australia, to diversify its portfolio." (per BBG)
- "Nippon Life Insurance Co. is considering investing in lower-rated collateralised loan obligations (CLOs) to increase yields, as it seeks to diversify its investments abroad." (per BBG)
- Today, the local calendar will see PPI data alongside BoJ Rinban Operations covering 1-3-year and 5-25-year JGBs.
