S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
Brown Brothers Harriman’s Elias Haddad notes that USD/JPY is trading just below its multi-decade high but argues that the recent slump in Oil prices should relieve some pressure on the Japanese Yen. He sees scope for the pair to move lower, while Japan’s contained inflation suggests the BOJ is not behind in its tightening cycle.
Benign inflation keeps BoJ patient
“USD/JPY is holding above 161.00, and trading just shy of the multi-decade high of 161.95 reached on July 2024. In our view, the slump in crude oil prices takes some pressure off JPY and could help nudge USD/JPY lower to 155.00.”
“Japan May inflation remained contained, in line with consensus. Headline CPI rose +0.1ppt to 1.5% y/y, held in check by government subsidies on energy.”
“Bottom line: Japan’s benign underlying inflation backdrop suggests the BOJ is not behind the curve in tightening policy. The swaps curve price in nearly 50bps of hikes to 1.50% in the next twelve months, which looks broadly appropriate.”
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