Dramatic Yen volatility dominates otherwise quiet day

Asia market update: Dramatic Yen volatility dominates otherwise quiet day; Hang Seng up 20% since Jan; TSLA FSD progress in China; CN Official & Caixin Mar PMIs + AU & JP Mar Retail Sales tomorrow.

General trend

- On an otherwise quiet day with Japan on holiday USD/JPY spiked briefly above ¥160 during the morning after having opened ~¥158; approaching levels not seen since the 1980’s and the Plaza Accord post-1985. However, during the afternoon Yen suddenly reversed to head back by 5 Big Figures to almost ~¥155 (essentially where it started last Friday prior to the BOJ rate decision). A major wire services cited traders saying that intervention had indeed occurred, but nothing official out of Japan on a market holiday, other than a 'no comment' by top FX diplomat Kanda.

- Led by mainland property indices the Hang Seng again led Asia up, +1.4% by lunch. The Hang Seng has now climbed 20% since January lows, entering bull territory and the longest winning streak since October, 2023.

- Notably various China Mainland property indices +7-10% today, with Hang Seng Mainland Properties Index +17% over the the past week.

- With the Nikkei closed all other Asia markets were also positive.

- Perhaps influenced by Yen weakness, China’s PBOC set the Yuan at the weakest level since Feb 28th.

- Apparent advances for Tesla in China regarding Full Self- Driving, with China govt granting data security approvals for the Model 3 and Model Y and a partnership with Baidu for the mapping services required in China.

- US equity FUTs +0.2 to +0.3% during Asian trading.

Looking ahead (Asian time zone)

- Tue Apr 30th CN Official & Caixin Mar PMIs, JP Mar Industrial Prod & Mar Retail Sales, AU Mar Retail Sales, NZ Apr Biz Confidence, (Tue eve EU Q1 GDP).

- Wed May 1st NZ Q1 Employment, (Wed night US Apr ISM Mnfg, Mar JOLTS and Fed rate decision).

- Thu May 2nd AU Balance of Trade, JP Consumer Confidence, BOJ MoPo Minutes [2 mtgs ago, Mar 19th].

- Fri May 3rd AU Mar Home Loans & Investment (Fri night US Apr NFP, Apr ISM Services).

Holidays in Asia this week

- Mon Apr 29th Japan.

- Tue Apr 30th Vietnam.

- Wed May 1st China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Thailand, Taiwan, Vietnam.

- Thu May 2nd China.

- Fri May 3rd China, Japan.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 7,580.

- New Zealand Mar Filled Jobs M/M: 0.4% v 0.3% prior.

China/Hong Kong

- Hang Seng opens +0.5% at 17,737; Shanghai Composite opens -0.1% at 3,086.

- CIFI Holdings (884.HK) Reaches agreement in principle with AHG on key terms of a proposal.

- TSLA Partners with Baidu for mapping services needed for self-driving (FSD) approval in China - press.

- TSLA (CN) China Auto Industry Assn: 76 smart vehicles produced by firms such as Tesla, BYD, LI, Lotus, Hozon and Nio are compliant with data security requirements in China - Chinese press.

- TSLA (CN) China's Premier Li on meeting Tesla's Musk: Tesla's development in China can be called a successful example of Sino-US economic and trade cooperation - Chinese state media (update).

- (US) Sec of State Blinken: Prepared for more sanctions on Chinese firms over Russia; US, China to hold first AI talks within weeks - follows meeting with China Pres Xi [weekend update].

- China Pres Xi: There is a room for China and US ties to improve - comments to US Sec of State Blinken [weekend update].

- China's PBOC said to have asked some institutions to reduce bond duration and focus on their core businesses [weekend update].

- China Jan-Mar Industrial Profits YTD Y/Y: +4.3% v +10.2% prior [weekend update].

- China Foreign Ministry Daily Briefing: Taiwan debate is a red line for us; Our trade with Russia should not be interfered with [weekend update].

- China Commerce Ministry (MOFCOM): Details EV buyer subsidies with one-off payment of CNY7-10K [weekend update].

- China FX Regulator: Domestic banks' US dollar purchases via swaps from clients hit a record $64.5B in Mar [weekend update].

- China PBOC sets Yuan reference rate: 7.1066 v 7.1056 prior (weakest since Feb 28th).

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net CNY0B v CNY0B prior.

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net CNY0B v CNY0B prior (weekend update)

Japan

- Nikkei 225 closed for holiday.

- USD/JPY *traders cite Yen-buying intervention by Japan - major US financial press wire.

- USD/JPY *Japanese yen reverses earlier losses; Currently trading ~¥156.75 (breached ¥160 earlier today, after opening ~¥158.00).

- TTN Research Alert: Watch out for the crashing Yen and any response by authorities this week during Japan’s Golden Week holidays starting Monday – and any potential knock-on effects regardless of whether they respond or not.

- China MOFCOM responds to Japan's semiconductor curbs: Export control measures proposed by Japan will seriously affect the normal trade between Chinese and Japanese enterprises and undermine the stability of global supply chains - Chinese press.

- USD/JPY briefly drops >170PIPS, erasing post-BoJ meeting gains as intervention concerns mount [weekend update].

- BoJ Gov Ueda: Declines to comment on short-term fx moves; weak yen so far not having big impact on trend inflation; impact of FX moves on inflation is usually temporary [weekend update].

- BOJ Gov Ueda: Must pay due attention to financial and FX market moves and their impact on inflation; To adjust the degree of monetary easing if price trend rises - post rate decision comments [weekend update].

South Korea

- Kospi opens +0.7% at 2,675.

Other Asia

- US Trade Chief: US and Taiwan to hold in-person negotiation talks on trade beginning on April 29th [weekend update].

North America

- (IL) White House National Sec Advisor Kirby: Israel has assured the US that they will not enter Rafah until the two countries have had a chance to share perspectives and concerns - US financial press (update).

Europe

- Scotland First Min Humza Yousaf reportedly is preparing to resign as SNP leader and First Minister as early as Monday - UK press.

Levels as of 01:20 ET

- Nikkei 225 closed; ASX 200 +0.9%; Hang Seng +0.8%; Shanghai Composite +0.7%; Kospi +0.8%.

- Equity S&P500 Futures +0.2%; Nasdaq100 +0.3%; Dax +0.3%; FTSE100 +0.4%.

- EUR 1.0692-1.0734; JPY 155.07-160.27; AUD 0.6525-0.6587; NZD 0.5942-0.5983.

- Gold -0.1% at $2,344/oz; Crude Oil -0.8% at $83.16/brl; Copper +0.2% at $4.5955/lb.