USD/JPY traded quietly lower during the session here, dropping from late US highs around 157.70 to lows just under 157.30. There was no verbal intervention, though there was a degree of nervousness above 157.50, where there was intervention to buy yen at the beginning of this month.

News and data flow was not steady here, but we did have some info to digest.

Late in the US afternoon brought the private survey of oil inventories, showing a huge draw (6.49mn barrels) well above the expected 2mn draw. This sets up an interesting inventory report from the U.S. Energy Information Administration (EIA) on Thursday morning US time.

Next up of note were comments from the Reserve Bank of Australia’s chief economist, Assistant Governor (Economic), Hunter. Hunter said, in brief, that “there is still some strength in inflation”, but with growth of wages near its peak, inflation should come down in time, There was nothing in her remarks to suggest any change to the expectation that the next move from the RBA will be a rate cut, eventually.

Federal Reserve Bank of Atlanta President Raphael Bostic spoke. He said he’s hopeful that the “explosive” price pressures seen during the pandemic will normalize over the next year. Bostic highlighted a particular metric he is watching closely, the breadth of inflation, price rises up 3% or 5% or more. He said a reduction in breadth, a return to pre-Covid levels, would help give him confidence to start cutting rates. On the labour market he said its still tight, but not as tight as it was, comparing it to the level it was at in February 2020.

While on central bankers, Swiss National Bank Chair Thoms Jordan spoke at an event in Seoul, South Korea. Notably, Jordan said a weaker Swiss franc is currently the most likely source of higher Swiss inflation, and added that the Bank could counteract this by “selling foreign exchange”. While we didn’t hear anything on intervention out of Japan Jordan took up the slack here!

From Australia we had Q1 business capital expenditure data. Australian business investment rose to a near 9-year high in the quarter, and plans for future investment (estimates) were also boosted. Capex on plant and machinery jumped 3.3% q/q, while that for buildings and structures dropped by 0.9%. We had the latest building approvals data, for April, down slightly at -0.3% m/m, bumping along at low levels.

Apart from the yen, major FX didn’t do much, small ranges prevailing.

usdyen wrap chart 30 May 2024 2