Forexlive Asia-pacific FX news wrap: China remains stuck in deflation ...Middle East

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Forexlive Asia-pacific FX news wrap: China remains stuck in deflation
China May CPI -0.1% y/y vs -0.2% expectedChina May trade balance $103.2B vs 101.3B expectedJapan Q1 GDP revised -0.2% vs -0.7% expectedJapan April current account +2258.0B vs 2563.9B expectedNew Zealand Q1 manufacturing sales +2.4% vs +1.1% priorECB's Nagel: I believe that we can now take the time to look at the situationBOE's Greene: The disinflationary process is still ongoing

Markets:

Gold flat at $3309US 10-yaer yields down 1.4 bps to 4.49%WTI crude oil down 8 cents to $64.49JPY leads, USD lags

Australia was on holiday to start the week and so are large parts of Europe. That didn't do much to dampen volatility early in the week as a full slate of Asian data kept things interesting. China remained in deflation with a sub-zero CPI and a particularly soft PPI number pointing to more price declines ahead.

    Of course, trade continues to dominate and China trade balance numbers showed a sharp drop in US-China trade. Despite that, China posted a huge trade surplus as it continues to dominate global manufacturing. There is optimism coming into the week about a US-China trade truce along with other US deals before the G7 next week. That led to strong gains for Chinese and Japanese stock markets.

    The US dollar was soft across the board and I'm inclined to think that was mostly a retracement from Friday's large post-NFP gains, but I could be convinced the riots in L.A. played at least a part. USD/JPY didn't fall on the Japanese GDP report but that number has hawkish implications for the BOJ.

    Overall it was a fairly lively start to the week and I'm sure that will continue.

    This article was written by Adam Button at www.forexlive.com.

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