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Forex Flash: Rebound of Chinese CPI makes easing unlikely - Nomura

Nomura economist Zhiwei Zhang notes that CPI inflation rose to 2.4% y-o-y in April from 2.1% in May against consensus views of 2.3%.

He comments that the rebound of CPI inflation makes policy easing unlikely. He expects CPI inflation to be on an uptrend over the next several months, rising to 2.7% in May and 2.9% in June, partly due to base effects. He writes, “As inflation gets close to the one-year benchmark deposit rate of 3%, it reduces the possibility of an interest rate cut. A rate cut would also contribute to more speculative pressure in the property market.” Further, he continues to expect monetary policy to tighten quantitatively in Q2. He believes that credit supply, as measured by social financing, peaked in Q1 and as policy tightens he expects GDP growth to trend lower to 7.5% in Q2 and 7.3% in H2. Finally, he expects April activity data to show a rebound, but mostly day to working day distortions.

Forex Flash: USD/JPY looks set to loiter - OCBC Bank

Emmanuel Ng of OCBC Bank is expecting USD/JPY to continue to loiter on neutral in the near term, with US and Japanese news flow ebbing and markets distracted by other regions.
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Forex: USD/JPY trading near intraday lows at 98.71/73

The USD/JPY has lost its grip on the 99.00 level Thursday, turning lower during European trading after several failed attempts at recovery. Ahead of events such as the BoE interest rate decision this morning at 11:00 GMT, the cross is now edging back lower again, approaching its intraday lows of 98.65. In these moments, the pair is operating at slightly above this region, perilously close at 98.71/73.
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