MNI Asia Pac Weekly Macro Wrap

EXECUTIVE SUMMARY

JAPAN:

• Yen gains, fuelled by intervention, stand at around 3.5% for the past week. This is the yen’s best weekly return since Nov 2022. With this week’s tendency for intervention to happen during periods of less liquidity, further episodes can’t be ruled out, particularly with Japan markets closed today and Monday.

AUSTRALIA:

• March retail sales data showed a “challenging” environment for the sector, and trade and building data also pointed to slowing activity. The RBA meets May 7 and updated staff forecasts will also be available.
• Shortages of available homes alongside strong population growth continue to drive house prices higher particularly in the mid-size capital cities.

NEW ZEALAND:

• Q1 data showed that the labour market is easing with the unemployment rate rising 0.3pp to 4.3%. However, wage inflation remained elevated and is likely to keep the RBNZ cautious for now. It will want to be confident that inflation will return sustainably to the band before considering rate cuts.

SHORT TERM RATES:

• RBA-dated OIS pricing has undergone a significant reassessment since the mid-March RBA Policy Meeting.

CHINA:

• China's official PMI prints for April were a mixed bag. Overall, while the services miss was disappointing, we remain in expansion territory. The manufacturing outcomes suggest resilience in this sector.
• USD/CNH has fallen sharply, in line with broader USD softness and rebound in the yen. We have challenged a break sub the 200-day EMA. Onshore markets return next week and equity market optimism is likely to be in focus.

SOUTH KOREA:

• South Korean trade for April continued to show an export recovery, albeit as expected by the consensus. CPI for April was a little below expectations. The PMI also softened but detail was better.

INDONESIA:

• April CPI was in line with March and within Bank Indonesia’s target band at 3.0% for headline and 1.8% for core. Rice prices fell on the month.

ASIA:

• The IMF revised up 2024 Asia Pacific GDP growth by 0.3pp to 4.5%, which was still slower than 2023’s 5.0%. The move was driven by a better outlook for China, India and Australia. The region is expected to account for 60% of global growth this year.
• ASEAN S&P Global manufacturing PMIs for April showed positive activity in the sector. Most Asian countries saw a moderation in inflation in March with China posting one of the largest. Non-Japan Asian headline moderated to 1.7% from 2.1% with core at 1.0% from 1.5% but excluding China the regional moderation was more muted and inflation more elevated at 3.6%

GLOBAL:

• Global export growth is recovering but mainly driven by emerging economies, especially China, but also advanced Asia, eastern Europe and the US. Global IP was more subdued but the manufacturing PMI is suggesting growth should improve.

See the attached below for more details.

weekly macro round up (May 3 2024) .pdf