ForexLive Asia-Pacific FX news wrap: USD/JPY swings

• Morgan Stanley sounding alarm on EV race, China may have already won & Tesla knows it.
• A US House vote on Trump's tax cut bill is edging closer - House Rules Committee approves
• BOJ Noguchi says Bank should only ramp up bond purchases during “severe market disruption”
• US national security panel has submitted its recommendation on Nippon Steel / U.S. Steel
• New Zealand narrows budget deficit forecast, eases near-term bond issuance plans
• CBA sees gold hitting $3,750/oz by year-end on safe-haven flows, weaker dollar
• Bank of Japan board member Noguchi: Japan’s economy is growing steadily
• ICYMI - China and 10 ASEAN countries have concluded negotiations on free trade agreement
• PBOC sets USD/ CNY reference rate for today at 7.1903 (vs. estimate at 7.2009)
• WSJ reports that Trump told EU heads in private Putin isn’t ready to end war
• AUD traders - heads up for RBA Deputy Governor Hauser to speak
• Singapore central bank official says current monetary policy settings remain appropriate
• Japan flash May manufacturing PMI 49.0 (prior 48.7)
• Singapore Q1 GDP -0.6% q/q (expected -1.0%, prior -0.8%)
• Heads to roll in North Korea - Kim sees negligence and irresponsibility
• Japan machinery orders surge, +13% m/m (expected -1.6%)
• Japan fin min Kato says Unsustainable imbalance in some countries behind trade imbalance
• Reuters survey: Two-thirds of Japanese firms want BOJ to pause rate hikes
• Australian S&P Global Manufacturing PMI Flash reading for May 2025: 51.7 (prior 51.7)
• Trump says seriously considering bringing Fannie Mae, Freddie Mac, public
• WSJ report that Walmart plans to cut around 1,500 jobs
• US Treasury confirm that Sec. Bessent met with Japan finance minister Kato
• US Com Sec Lutnick says again on tariffs that 10 is baseline, no one’s going below 10
• ECB's Nagel sees progress on tariffs, but says still more work to be done
• Gold well supported, expect it to test US$3500
• US House Speaker Johnson says yet to decide on vote on Trump tax bill, today or tomorrow
• Morgan Stanley say Federal Reserve rate cuts may not begin until September
• Nike to raise prices on a wide range of products as soon as this week
• Forexlive Americas FX news wrap 21 May: Higher US yields worry markets.30Y at new '25 high
• Major US stock indices close today lower as yields rise
• USDJPY falls below key support, tests Fibonacci retracement zone
• Trade ideas thread - Thursday, 22 May, insightful charts, technical analysis, ideas

The yen was a notable mover during the session here, with yen crosses fist surging higher and then giving it all back, and more.

The move higher of USD/JPY (and crosses) came on the back of a statement from the US Treasury that Secretary Bessent had met with Japan finance minister Kato and forex matters were discussed. It was an innocuous statement of fact making points that

the two did not discuss foreign exchange levels

the two shared belief that exchange rates should be market determined

and even made the point that the present the dollar-yen exchange rate reflects fundamentals!

But, that’s all it took for USD/JPY to race from around 143.60 to highs above 144.30 in just a few minutes. Admittedly, it was at a low-liquidity part of the 24 hours FX cycle (just prior to 8am Sydney time (10am New Zealand, 7 am Tokyo, 6am Singapore and Hong Kong, 6pm US Eastern time, 12am/11 pm Frankfurt/London).

Over the course of the rest of the session here USD/JPY gave it all back, and more. Its currently below 143.20 as I post.

We heard from Trump via a social media post. Trump said he is “giving very serious consideration” to bringing Fannie Mae and Freddie Mac public and would decide in the near future.

We had data from Japan, a huge surge in machinery orders during March. This is a volatile data set but the jump was impressive, +13.4% m/m and +8.4% y/y. At the margin it’ll diminish recession fears. The PMIs that followed, albeit on preliminary (for May), showed the manufacturing sector improving but still in contraction, now for the 11^th consecutive month. Services remained in expansion.

Bank of Japan (BOJ) board member Asahi Noguchi spoke. Noguchi tends to the dovish end of the policy spectrum, but nevertheless said the Bank should proceed gradually with rate hikes, albeit only with clear evidence that inflation is sustainably anchored around the 2% target, supported by wage growth. He also said there’s no need to make major changes to the bank’s plan for tapering bond purchases. Noguchis also reiterated that the Bank should only ramp up bond purchases during “severe market disruption”, signaling no immediate need to counter the recent spike in super-long bond yields.

Gold rose on the session, as did Bitcoin. BTC/USD above US$110K is a new high.

As a heads up, it looks like the US House vote on Trump's tax bill is likely at 4.30am US Eastern time. This is still fluid but that's the current estimate.