• 3 reasons the Bank of Japan is expected to keep policy unchanged at this week’s meeting
• Citi says markets mispricing downside risks for inflation heading into the May inflation
• Former Dallas Fed Pres Kaplan says FOMC ‘hawkish pause’ in June, July hike is open
• National Australia Bank raise their RBA terminal rate forecast to 4.6% (from 4.35%)
• Australia Business confidence (May) -4 (prior 0) and Conditions +8 (prior +14)
• People’s Bank of China cuts 7 day Reverse repo rate to 1.90%, from 2%
• PBOC sets USD/ CNY central rate at 7.1498 (vs. estimate at 7.1490)
• Bank of England Governor Bailey speaking Tuesday, as is MPC member Dhingra
• Australian data – Westpac Consumer Confidence Index (June) +0.2% m/m (prior -7.9%)
• Deutsche Bank US CPI preview – “event of the week” – Clear FOMC impact factor
• Japan Quarterly Business Sentiment Index survey, Q2 2023. Large manufacturing index -0.4%
• Brief European Central Bank, and CPI, previews via Deutsche Bank
• GBP traders – BoE Mann spoke Monday, “very significant concern” on sticky core inflation
• US stockmarkets rallied on Monday – is this Goldman Sachs doing?
• Goldman Sachs CEO Solomon says sticky inflation is likely to remain a tough problem
• US bank deposits to come under pressure again
• US CPI preview: “A hotter advance in categories outside of energy and food”
• Morgan Stanley on the end of the S&P500 bear market: “We respectfully disagree “
• ICYMI: PIMCO CIO says is underweight the US dollar vs. other G10 and EM
• No Fed Blackout for Clarida (again!), seeing early evidence of quantitative easing fatigue
• Forexlive Americas FX news wrap: Stocks rip, oil slips and cable dips
• NASDAQ surges. S&P and Dow also off to a good start for the week
• Trade ideas thread – Tuesday, 13 June 2023

The
People’s Bank of China slashed the onshore reference rate by 200+
points today, taking CNY to its weakest since 30 November last year.
The Bank also cut its 7-day reverse repo rate to 1.9%, down from the
previous 2% level. Expectations are high for it to cut its Medium
Term Lending Facility (MLF) rate on Thursday, the 15^th.
The one-year MLF is currently at 2.75%, with a cut to 2.65% widely
expected. On Tuesday next week, the 20^th,
the PBOC set 1- and 5-year Loan Prime Rates (LPRs). A cut to the MLF
will likely herald a cut to one, or both of these also.

The
data focus for the session was on the National Australia Bank
Business Survey which showed both business confidence and conditions
slipping for the previous month. The details in the report were also
not bright. Inflation pressures, for example, rose. In the wake of
its report NAB bumped higher its expectation for the peak RBA cash
rate, from 4.35% to 4.60. Analysts at the bank now expect an Reserve
Bank of Australia rate hike in July and August, of +25bp each time.

Earlier
in the session we had Westpac’s Australian consumer confidence
report. The report’s Unemployment Expectations index rose to a
33-month high.

Major
FX was mixed. USD/JPY is barely changed, a little lower, while EUR and GBP have inched
a little higher. AUD, CAD and NZD have dribbled a little lower. The
yuan lost ground, USD/CNH hitting highs above 1.1750.

Asian
equity markets:

• Japan’s Nikkei 225 +1.6%

• China’s Shanghai Composite -0.1%

• Hong Kong’s Hang Seng -0.3%

• South Korea’s KOSPI +0.2%

• Australia’s S&P/ASX 200 -0.1%

USD/CNH (offshore yuan):

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