ForexLive Asia-Pacific FX news wrap: USD/JPY swings. PBoC cuts. RBA next.

• Another cascade of Federal Reserve speakers due on Tuesday
• US and Japan are expected to hold talks on Friday, May 23
• South Korea end-March household credit marks fastest growth Y/Y since end-June 2022
• European Central Bank’s Knot speaking on Tuesday (and three other ECB officials)
• Bank of England Chief Economist Huw Pill speaking Tuesday on ‘The monetary policy outlook’
• China’s state planner approved 27 fixed asset investment projects in January – April
• Australian politics – Opposition coalition splits. Nationals withdraw.
• South Korea, U.S. will resume tariff talks on Tuesday, aiming for July trade deal
• Japan finance minister Kato hints at plans to speak with Bessent on FX this week
• PBOC sets USD/ CNY mid-point today at 7.1931 (vs. estimate at 7.2112)
• PBOC cuts Loan Prime Rates (LPRs) by 10bp for both 1- and 5-year loans
• Akazawa: Japan, U.S. conducted working-level talks on bilateral trade on Monday
• More rate cuts coming from Chinese banks – as expected
• 25bp RBA rate cut today is baked in, but here’s what to watch for in the Statement
• UBS once again recommends “a full strategic allocation” to US equities
• ICYMI – China said the US has undermined the consensus reached in Geneva tariff talks
• India discussing US trade deal structured in three tranches, interim agreement before July
• Chinese bank has cut its yuan deposit rate, as expected
• The central bank to all central banks warns of a potential “scramble” for US dollars
• ICYMI: Nippon Steel sweetens U.S. Steel bid with US$14bn investment pledge
• General Motors to stop exporting vehicles from the US to China
• Forexlive Americas FX news wrap 19 May: The Fed is uncertain.Moody downgrade fear subsides
• Bank of Japan to seek market views on Japanese Government Bond buying
• ICYMI – ECB’s Muller said must be cautious on further rate cuts
• ICYMI – China’s state banks are expected to cut deposit rates today (Tuesday China time)
• US stocks close marginally higher. S&P up for the sixth consecutive day
• Trade ideas thread – Tuesday, 20 May, insightful charts, technical analysis, ideas

USD/JPY volatility driven by Japan headlines

USD/JPY saw sharp swings during the session, initially jumping above 145.50 before quickly retreating below 144.80.

• Japan’s Economy Minister Akazawa said working-level bilateral trade talks took place Monday in Washington. He reiterated Tokyo’s demand for the removal of U.S. tariffs on autos, steel, and aluminum.

• Finance Minister Kato followed, signaling openness to discussing FX matters with U.S. Treasury Secretary Bessent at this week’s G7 meeting. Kato said he would stress the need to avoid excessive currency volatility.

Apart from the yen, major FX was fairly subdued with minor shifts only.

PBoC cuts LPRs by 10bps in measured easing

The People’s Bank of China cut its one- and five-year loan prime rates by 10 basis points to 3.0% and 3.5%, respectively — the first cut since October’s 25bp cut for each. The minor trim today continues the trend of Chinese policy adjustment gradualism.

• The move follows a 10bp reduction in the 7-day reverse repo rate earlier this month.

• PBoC Governor Pan Gongsheng had signaled the LPR cuts, calling them a natural consequence of the earlier repo adjustment.

State-owned banks had earlier trimmed time deposit rates, as expected:

• by
  5 bps to 0.05%
• cuts
  on one-year time deposits by 15 bps to 0.95%

• 25
  bp cuts on three- and five- year time deposits

US Senate advances landmark crypto legislation

The U.S. Senate voted 66–32 to advance a major cryptocurrency regulatory overhaul. Sixteen Democrats joined most Republicans in backing the procedural motion, opening the door to the chamber’s changes to crypto rules.

In regional equities, a strong debut for CATL in Hong Kong

Chinese EV battery maker CATL surged ~15% in its Hong Kong trading debut, marking the year’s largest regional listing.

Australian politics: Coalition split after election rout

Australia’s Liberal-National coalition — a conservative partnership spanning 80 years — is set to end. The Nationals’ leader ruled out forming another coalition with the Liberals following a heavy election defeat earlier this month, which saw the Liberal Party leader lose his seat.

Stay tuned, the Reserve Bank of Australia is next, due at 0430 GMT / 0030 US Eastern time – the Bank widely expected to cut its cash rate by 25bp.