Asia Summary and Highlights 7 March
Japan's Finance Minister Kato says recently there have been one-sided, rapid market moves
Asia Session
Regional sentiment started on a sour note on Friday's Asia session. It seems to be a reactive offer from the overnight U.S. equities performance. Nikkei is currently leading the losses while HSI and Chinese equities reversed earlier losses. U.S. three major equity indexes have their toes in the green after the slump on Thursday. AUD/USD is down 0.42% to 0.6306, NZD/USD also 0.36% lower at 0.5714 while USD/CAD rose 0.06%.
The USD/JPY is fast approaching Thursday's low at 147.30 as risk sentiment stays sour. The U.S. Treasury are lower while 10yr JGB yields are back in the green. Combined with Japan Economy Minister Ryosei Akazawa preparing to officially declare an end to long-term deflation, it looks like there are more downside to the pair. Japan's Finance Minister Kato's verbal intervention seems to be a reactive mechanic on JPY volatility rather than him being against JPY strength as BoJ have kept the weak JPY's impact towards the Japanese economy in mind in the past meetings. USD/JPY is trading 0.22% lower at 147.66. Else, EUR/USD is up 0.28% and GBP/USD is up 0.05%.
North American session
EUR/USD picked up after the as expected 25bps ECB easing with limited forward guidance raising doubts about the scope for further moves. From slightly below 1.08 EUR/USD peaked slightly above 1.0850, before eventually returning to levels seen before the decision.
Comments from Commerce Secretary Lutnick that tariffs on USMCA goods from Canada and Mexico would be delayed by a month triggered a sharp slide in USD/CAD from near 1.4350 to near 1.4250. Trump confirmed this for Mexico, and later for Canada. As markets waited for the Canada confirmation USD/CAD crept back to 1.43. A bounce in equities on the Lutnick comments also faded, as did a bounce in USD/JPY above 148. Confirmation of the Canada delay got only a limited response. Trump stated there would be no USMCA exception for autos in April.
US initial claims corrected a preceding sharp rise falling to 221k from 242k. The US recorded a record trade deficit in January while Canada’s trade surplus increased in an attempt to beat threatened tariffs.