From Marc Chandler at Bannockburn Global Forex:
Overview: The dollar's recovery begun yesterday has extended into today's activity. The greenback is higher against all the G10 currencies and most emerging market currencies, but the Indian rupee and Mexican peso. The BOJ did not reduce its bond buying at today's operation and the market sold the yen on the news. After reaching JPY153.60 yesterday, the greenback is near JPY156 now. New initiatives to support the beleaguered property market was not enough to offset the disappointing retail sales data and the yuan has pared this week's gains. On the week, the dollar has fallen against the G10 currencies but the yen and Swiss franc. It is also softer against most of the emerging market currencies.
China's new property initiative may not have helped the yuan, but mainland stocks rallied, with the composite indices up over 1% today. Japan's markets were mixed, but South Korea, Taiwan, and Australian and New Zealand shares fell. Europe's Stoxx 600, which snapped a nine-day rally yesterday is off about 0.25% today. US index futures are flattish. Benchmark bond yields in Europe are paring this week's decline with a 2-4 bp increase today. The 10-year US Treasury is up one basis point to 4.38%, leaving it down about 10 bp on the week. Gold is consolidating after reaching a four-week high yesterday near $2400. It is up around 1% this week. July WTI set the high for the week yesterday near $79.30. It is consolidating inside yesterday's range so far today.
Asia Pacific
The US tariffs announced this week impact an estimated $18 bln of imports from China. Since the US imports few electric vehicles from China, the quadrupling of the tariffs will have little immediate impact, but over time will encourage China producers to do what Japanese automakers did in 1980s and that is move some production offshore. The Biden administration appears opposed to allowing Chinese firms to establish production facilities in the US, but Trump's advisors seem less hostile. Europe also seems more open to Chinese direct investment than the US. Note that even without the Chinese competition, Ford and GM EV initiatives are in trouble. Ford is scaling back its EV operations and GM said it will re-introduce plug-in hybrids in the North American market. Separately, earlier today, China reported April economic data that showed a sharp acceleration in the year-over-year pace of industrial output (6.7% vs. 4.5%) but slower retail sales (2.3% vs. 3.1%). Fixed asset investment also slowed on a year-to-date, year-over-year calculus (4.2% vs. 4.5%). The property market continues to struggle. New and used house prices fell (month-over-month for the 11th and 12th consecutive month respectively) and at an accelerated pace. Residential property sales and property investment continue to slump. Beijing did announce remove the floor for mortgage rates, lowered required down payments, and the central bank facilitate lending to local governments (CNY300 bln or ~$41.5 bln) to buy unused houses, in the latest bid to stabilize the property market....
....MUCH MORE