Asia Summary and Highlights 5 Mar

Asia Session

Following a dip below 2% in January, the Japanese Tokyo CPi rebounded in February. Headline y/y CPI came in at 2.6% from prior 1.8%, ex-Fresh Food 2.5% from prior 1.8% and ex Fresh Food & Energy 3.1% from prior 3.3%. Both the headline and ex fresh food see a significant rebound while ex fresh food and energy continues to moderate. The data echoes our forecast to see a rebound in Q1 2024 before further moderation throughout the year. While in a short run, the data may affect sentiment, the key factor remains in labor cash earning to see a sustainable trend. Thus, USD/JPY sees little impact and is trading 0.02% lower at 150.48 and a small range for this Asia session as both U.S. Treasury and JGB yields slip. 

Reuters reported China will target around 5% 2024 GDP growth in their work report, which is a similar target for 2023. However, the budget deficit is targeted to be lower in 2024 than 2023 and the proposed stimulus does not seem to be enough to bring the Chinese economy out from current turmoil. Regional sentiment is not impressed with SSE barely in the green with "National Team"'s buying sighted and HSI dropping close to 3%. The soft sentiment dragged AUD/USD down 0.28% to 0.6491 and NZD/USD down 0.19% to 0.6082 while USD/CAD rose 0.08% on softer oil. Elsewhere, EUR/USD is down 0.04% and GBP/USD is down 0.06%.

North American session

A quiet North American session saw very little FX movement, with most pairs little changed. GBP made some modest gains, with EUR/GBP dropping around 10 pips to 0.8550, and there was a small rise in EUR/NOK of around 2 figures, but otherwise very little movement. GBP/USD saw highs marginally above 1.27. 

USD/JPY remained firm supported by UST yields particularly at the front end. There was no significant data though Fed’s Bostic cautioned against near term rate cuts given the economy’s strength. The commodity currencies saw marginal late losses as oil slipped.