On May 13, the minutes from the Bank of Japan's April meeting revealed that several policy board members advocated for an early interest rate hike during the session. One member explicitly noted the possibility of a rate increase in June, highlighting growing hawkish sentiment within the central bank as the crude oil shock from the conflict in Iran intensifies recent tightening pressures. In response, Japan's 10-year government bond yield climbed to a 29-year high on Tuesday. The minutes cited one member stating, "Even with ongoing uncertainties regarding future developments in the Middle East, it is highly likely that the Bank of Japan will commence raising interest rates from its next meeting." Another member expressed the view that, "While there is no immediate need for hasty action, the central bank should move to raise rates as soon as possible, provided the economy shows no clear signs of slowing down." Further opinion indicated that the current policy rate remains significantly below the economy's neutral rate, necessitating steady rate hikes every few months. Should inflation risks escalate further, a more decisive acceleration of the rate hike pace would be warranted.
In other developments, the latest data from the New York Fed shows that although the rate of newly delinquent consumer loans in the United States slowed slightly in the first quarter of 2026, the overall delinquency rate remains at its highest level in nearly eight years, reflecting the persistent pressure high interest rates and rising living costs continue to exert on American household finances. According to the New York Fed's Quarterly Report on Household Debt and Credit, released Tuesday, the proportion of U.S. consumer loans delinquent by at least 30 days stood at 4.8% as of Q1 2026, unchanged from the previous quarter and ending a streak of six consecutive quarterly increases. However, this level remains the highest since 2017. The report indicates that delinquency rates for most loan categories saw a slight decline, except for auto loans and Home Equity Lines of Credit (HELOC). Notably, student loan stress remains significant, with 11% of student loans entering early delinquency in the first quarter. While this is an improvement from the 16% rate in Q4 2025, the overall default rate continues to climb.
Key data to watch today include the Eurozone's Q1 seasonally adjusted GDP quarter-on-quarter revision and the U.S. April Producer Price Index year-on-year.
**Gold / USD** Gold traded lower yesterday with a slight daily decline, currently hovering around the 4700 level. In addition to profit-taking exerting some downward pressure, robust U.S. inflation data released during the session, which reignited expectations for Federal Reserve rate hikes, was a significant factor weighing on gold. However, a recovery in physical gold demand limited the extent of its decline. Today, focus is on resistance near 4750, with support around 4650.
**USD / JPY** The USD/JPY pair edged higher yesterday, posting a modest daily gain and is currently trading around 157.70. The primary driver was the U.S. Dollar Index's advance, supported by safe-haven demand and positive economic data. However, concerns over potential renewed Japanese intervention in the currency market and the hawkish tone of the Bank of Japan meeting minutes released during the session capped the pair's upside. Today, resistance is monitored near 158.50, with support around 157.00.
**AUD / USD** The Australian dollar declined yesterday with a slight daily loss, currently trading near 0.7240. Apart from profit-taking pressure, a resurgence in market risk aversion also weighed on the Aussie. Furthermore, the U.S. inflation data released during the session, which revived Fed rate hike expectations, added to the downward pressure. Today, focus is on resistance near 0.7350, with support around 0.7150.
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