Asia Summary and Highlights 27 Feb

Asia Session

The January National CPI, all three items, stays above 2% BoJ target.  Headline y/y CPI coming in at 2.2% from 2.6% in December , ex fresh food 2.0% from 2.3% and ex fresh food & energy at 3.5% from 3.7%. The Japan inflation picture continue to moderate and move closer to BoJ target. However, ex fresh food and energy CPI remains a tough nut to crack and maybe on BoJ's mind for a while. Still, all eyes are on March wage negotiation as the result will have a higher impact than CPI currently. USD/JPY moved lower by 0.13% to 150.48 as U.S. Treasury Yields move lower and JGB yields higher.

ABC media reports that China will remove tariffs on Australian wine at the end of March which was imposed in the Trump era. While this seems to be a sign that the Australia-Chinese relationship improves, it could also be read as a signal to Australia as Trump has his eyes on presidency again. With the Chinese equity market performing, AUD/USD is erased earlier losses and is trading 0.09% higher at 0.6546, NZD/USD on the other hand fell 0.1% to 0.6166 while USD/CAD slipped 0.04% as oil rose slightly more than 10 cents. Elsewhere, EUR/USD is unchanged for the session and GBP/USD is down 0.04%. 

North American session

The USD moved modestly higher through a quiet North American session, though much of this was reversed with a late USD recovery. The AUD lost the most ground, dropping around 15 pips to 0.6540. GBP/USD was also slightly lower, but there was not much movement in EUR/USD or USD/JPY. USD/CAD slipped around 20 pips to 1.35. UST yields advanced while equities were subdued.

January new home sales at 661k were up 1.5% to follow December’s 7.2% increase though the two straight gains did not fully erase the two straight declines that preceded them, and the data is on the low side of expectations. Otherwise, there was little news.