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Japan finance ministry 30 year Japanese Government Bond auction bid-to-cover ratio 2.92

• prior sale 3.07
• & 12-month average 3.39
• weakest demand ratio since 2023
• average yield 2.904%, yield at lowest accepted price 2.938%
• auction tail at 0.49 yen versus 0.30 yen at previous auction

Not strong results in Japan.

This article was written by Eamonn Sheridan at www.forexlive.com.

• Federal Reserve’s Kugler and Harker to speak on economy & policy Thursday
• China Securities Journal says PBOC may cut RRR to ensure reasonable liquidity in 2h25
• Bank of England Monetary Policy Committee member Megan Greene speaks Thursday
• China Caixin Services PMI (May) 51.1 (prior 50.7)
• Australian April goods exports -2.4% m/m (prior +7.6%)
• More on: US auto suppliers urge swift response to China’s rare earth export curbs
• PBOC sets USD/ CNY mid-point today at 7.1865 (vs. estimate at 7.1762)
• Amazon prepares to test humanoid robots for delivering packages
• Ukraine and the US are working to launch a joint minerals fund by the end of the year
• US auto group urge “immediate and decisive action” on access to Chinese rare earths
• Japan April inflation adjusted wages -1.8% y/y, down for a fourth month
• Fed’s Kashkari says the labour market is showing some signs of slowing down
• RBC says the USD ‘remains extremely overvalued’, ‘much more weakness still lies ahead’
• Czech central bank board member prefers to leave rates on hold at June meeting
• Musk’s opposition is ‘one disagreement’ in an otherwise harmonious relationship
• TD add another RBA 2025 interest rate cut to their forecast: 25bp cut in August, November
• Deutsche Bank is maintaining its call for a 1.50% ECB terminal rate, but notes upside risk
• Saudi Arabia pushing OPEC+ for a faster pace of oil production increases in coming months
• ICYMI: Saudi Arabia lowered some July price of crude for Asia, raised for Northwest Europe
• Forexlive Americas FX news wrap: US dollar falls after soft ADP and ISM data
• Trade ideas thread – Thursday, 5 June, insightful charts, technical analysis, ideas

Major currencies traded in narrow ranges during the Asian session, with light news flow and the focus on Japanese wage data and China’s Caixin Services PMI.

In Japan, wages rose year-on-year in April, with base pay recording its fastest growth in four months. However, high inflation continued to erode household purchasing power, with real wages falling for the fourth straight month. The ongoing decline in inflation-adjusted earnings is another complication the Bank of Japan faces in its plans to normalise policy.

China’s Caixin/S&P Global Services PMI for May rose to 51.1 from 50.7 in April, marking 29 consecutive months of expansion since January 2023. The print slightly beat expectations (51.0), with improved domestic demand and business confidence. However, foreign demand slipped into contraction for the first time this year. The Composite PMI dropped to 49.6—its lowest since December 2022—reflecting the drag from earlier-released weak manufacturing data.

FX markets remained subdued, with traders now turning attention to the upcoming European Central Bank decision, where a 25bp rate cut is widely expected.

Decision due from the ECB at 1215 GMT/0815 US Eastern time. Lagarde’s press conference follows a half hour later.

• This snapshot from the ForexLive economic data calendar, access it here.
• The times in the left-most column are GMT.
• The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.

This article was written by Eamonn Sheridan at www.forexlive.com.

China Caixin / S&P PMI for May 2025

Services 51.1

• expected 51.0, prior 50.7
• overall demand and business confidence improved
• foreign demand contracted for the first time this year
• new export business contracted marginally, the first time since December
• job market posted a slight expansion in May, breaking a two-month contraction, with the corresponding gauge hitting a six-month high
• input costs grew at their quickest pace in seven months due to rising purchasing prices and labor costs
• prices charged to customers fell for the fourth straight month

Composite 49.6, dragged down by the soft manufacturing PMI (China Caixin May 2025 Manufacturing PMI 48.3 (prior 50.4!))

• prior 51.1
• 49.6 is the lowest since December 2022

This article was written by Eamonn Sheridan at www.forexlive.com.

Australian trade balance data for April 2025

5413mn surplus

• expected 6000mn, prior 6900mn

Exports -2.4% m/m

• prior +7.6%

Imports +1.1%

• prior -2.2%

This article was written by Eamonn Sheridan at www.forexlive.com.

A leading U.S. auto supplier group is warning that China’s restrictions on rare earth and critical mineral exports pose an urgent threat to the industry. MEMA, the Vehicle Suppliers Association, said on Wednesday that parts manufacturers are already facing “serious, real-time risks” to their supply chains.

The group stressed that the situation remains unresolved and that concerns are mounting, calling for “immediate and decisive action” to avoid widespread disruption and economic fallout across the vehicle supply sector.

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Earlier headline here:

• US auto group urge “immediate and decisive action” on access to Chinese rare earths

This article was written by Eamonn Sheridan at www.forexlive.com.

Ukraine and the United States are working to launch a joint minerals fund by the end of the year, with the first board meeting expected in July, Ukraine’s First Deputy Prime Minister Yulia Svyrydenko said during a visit to Washington.

Svyrydenko met with U.S. Treasury Secretary Scott Bessent and the U.S. Development Finance Corporation to outline next steps, including decisions on seed capital and a multi-year investment strategy.

• The fund stems from a minerals development agreement signed in April after intense negotiations that improved terms for Kyiv.
• The deal, strongly backed by Trump, was later ratified by Ukraine’s parliament and is seen as a key step in strengthening economic ties.

• The agreement also helped ease tensions between Trump and Ukrainian President Volodymyr Zelenskiy following earlier friction over the path to resolving Ukraine’s ongoing war with Russia.

This article was written by Eamonn Sheridan at www.forexlive.com.

US auto supplier group says “immediate and decisive action is needed to prevent widespread disruption and economic fallout across the vehicle supplier sector” on Chinese rare earth issue.

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The warning from the U.S. auto supplier group reflects growing concerns that tightening Chinese controls over rare earth exports could severely disrupt the supply chains critical to vehicle manufacturing. Rare earth elements are essential components in electric motors, batteries, and various high-tech systems used in modern vehicles. With China dominating global production and processing of these materials, any restrictions threaten to stall production lines, increase costs, and delay vehicle deliveries. The group’s call for “immediate and decisive action” underscores the urgency to secure alternative sources or build domestic capacity to avoid a potential economic shock across the entire automotive supply chain.

This article was written by Eamonn Sheridan at www.forexlive.com.

Real wages fell for a fourth consecutive month in Japan in April

-1.8% y/y,

• from -1.8% also in March and -1.5% in
  February

Base pay +2.2% y/y, the fastest in four months

• Overtime pay +0.8%

Total average cash earnings, or nominal pay, +2.3%

• from +2.3% also in March

—

Inflation-adjusted real wages are a key determinant of households’ purchasing power. The prolonged decline will troubl;e Bank of Japan rate hike desires.

This article was written by Eamonn Sheridan at www.forexlive.com.

RBC Global Asset Management says the U.S. dollar’s recent slide could be signalling a broader shift in investor sentiment away from American assets. In a note to clients, the firm points to the 10% decline in the U.S. Dollar Index since January—despite ongoing market volatility and elevated investor anxiety that would typically support the greenback.

RBC argues that the scale and timing of the move may reflect doubts over the U.S.’s “exceptionalism” and its traditional safe-haven status. With the dollar still appearing significantly overvalued, the firm sees potential for further weakness ahead. For global investors, this has real implications: the declining dollar has weighed on the relative performance of U.S. stocks and bonds so far this year, especially when measured against international peers on a currency-adjusted basis.

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10 year perspective:

This article was written by Eamonn Sheridan at www.forexlive.com.

White House official:

• Musk’s opposition is ‘one disagreement’ in an otherwise harmonious relationship
• The White House will not consult every policy decision with Elon Musk
• Trump is committed to getting the bill passed despite opposition from Musk

This is in response to Musk’s oppostiion to Trump’s ‘big bill’ that will skyrocket US debt and fiscal troubles:

• Musk described it as a “disgusting abomination”

Gonna need a new hat

This article was written by Eamonn Sheridan at www.forexlive.com.

Saudi Arabia is pushing for OPEC+ to maintain its faster pace of oil production increases in the coming months, aiming to regain market share rather than support prices, according to sources familiar with the matter. This according to a Bloomberg (gated) report.

In summary:

• Saudis wants at least 411,000 barrels per day added in both August and possibly September
• major shift in Saudi strategy — moving away from price defence via output cuts to actively increasing supply, even at the cost of lower prices
• some OPEC+ members like Russia, Algeria, and Oman wanted to pause the increases
• Saudi Arabia sees high seasonal demand as justification to continue

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The next OPEC+ meeting is scheduled for July 6, when output policy for August will be decided.

Brent update:

This article was written by Eamonn Sheridan at www.forexlive.com.

Saudi Arabia state-owned oil company Saudi Arabian Oil Co. (Aramco) lowered its official selling price for July loadings of Arab Light to Asia to $1.20 a barrel above the Oman/Dubai average, $1.40 in June.

Aramco’s latest pricing moves suggest a softer demand outlook in Asia, with cuts across its light and medium crude grades, while the price for Arab Heavy remained unchanged.

In contrast, the company raised its prices to Northwest Europe and the Mediterranean by $1.80 per barrel. U.S. buyers saw modest increases of $0.10 for Arab Extra Light and Light, with no change to Medium and Heavy grades.

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The decision came just as OPEC+ members agreed on Saturday to step up production for a third straight month in July, adding to concerns of a supply glut amid an uncertain demand environment.

This article was written by Eamonn Sheridan at www.forexlive.com.