Reserve Bank of Australia Governor Lowe spoke today after the bank raised its cash rate again yesterday. Lowe didn’t add much to his statement yesterday. In a nutshell the RBA has renewed concerns about inflation, and wage growth accompanied by declining productivity, and will thus raise rates again if needs to. Which seems likely given the stickiness of inflation.

Also from Australia today were January – March economic growth data. The q/q and y/y rates were both disappointing, missing low estimates. The details on the data were ugly. To mention just two:

  • the household saving ratio fell to its lowest since June 2008
  • productivity fell 0.3% in the quarter to be down 4.6% over the year (the RBA is right to be worried about wage rises in the absence of productivity growth, this has implications for higher inflationary pressure).

Apart from the Australian focus, there was little else. The People’s Bank of China set the reference rate for onshore yuan at its weakest (for CNY, highest for USD/CNY) since December 1 last year. The PBOC’s persistent affirming of the slide for the yuan is a form of stimulus for the country's export sector. As I post we are awaiting May trade data from China.

Major FX traded in relatively subdued ranges. USD/JPY was the notable mover, falling from highs circa 139.60 pre-Tokyo to lows just under 139.250. There was little news nor data from Japan today.

Asian equity markets:

  • Japan’s Nikkei 225 -1.4%

  • China’s Shanghai Composite +0.3%

  • Hong Kong’s Hang Seng +1.2%

  • South Korea’s KOSPI +0.3%

  • Australia’s S&P/ASX 200 -0.01%

Offshore yuan:

usdcnh wrap chart 07 June 2023