Asia Summary and Highlights 26 Feb

Asia Session

TD joined the club to call for RBNZ hikes later this week, along with ANZ, citing the upward revision of 2yr household inflation to 3.2% from 3% would be an early indicator that the RBNZ would like to hike. However, this is not the number we believe would sway the RBNZ back into motion as this data is a household survey, not the RBNZ forecast. For RBNZ to tighten again, we would first look for a significant upward revision in RBNZ's inflation forecast. On Monday morning, the NZD/USD is being dragged by soft regional sentiment in HK and China and is seen trading 0.44% lower at 0.6170, AUD/USD also 0.13% lower at 0.6555 while USD/CAD rose 0.02%. 

U.S. Treasury Yields are lower across the curve, so as JGB yields and see USD/JPY erasing early losses to trade unchanged at 150.48. Elsewhere, EUR/USD is up 0.03% and GBP/USD is down 0.06%.

North American session

USD/JPY dropped around 30 pips with 150.30 the low but there was otherwise little movement in FX in the North American session, although USD/CAD edged up slightly, nudging above 1.35. 

The market was very quiet, with no data, but UST yields were lower. This followed overnight comments from the Fed’s Waller echoing the general recent chorus that there is no hurry to cut rates though in saying he needed to see at least a couple of months of inflation data seemed to leave a Q2 move as possible. Fed’s Williams later said he expects easing later this year, but could consider tightening if the economic outlook changed materially.