Asia Summary and Highlights 11 Mar
Japan (final) Q4 GDP +0.1% q/q, preliminary -0.1%; annualized 0.4%, preliminary -0.4%.
Bank of Japan is considering scrapping its yield curve control program reported by Japan's JiJi
China February CPI +0.7% y/y (expected +0.3%)
Asia Session
Japan 2023 Q4 q/q GDP (final) has been revised to +0.1% from -0.1% in the preliminary read, y/y to +0.4% from -0.4%. However, the details show private consumption to be revised further lower from -0.2% to -0.3% and it suggest Japanese continue to bear the burden of negative real wage and inflationary living pressure. Capex, on the other hand, is revised significantly higher. Over the weekend, Japan's JiJi reported that the Bank of Japan is considering scrapping its yield curve control program as soon as March. USD/JPY initially dipped to 146.53 before retracing most losses to trade 0.07% lower at 146.95 with JGB yields outperforming U.S. Treasury Yields.
The risk sentiment is diverged between regional markets and U.S. major equity indexes. Hong Kong and Chinese equity are outperforming while Japan and U.S. major equity indexes are in the red. The latest Chinese y/y CPI came in higher at +0.7% than 0.3% expected and bring China out of deflation. The demand for food and service for the spring festival seems to be the key driver behind. AUD/USD is dragged lower by mixed sentiment and soft commodity price to trade 0.23% lower at 0.6609, NZD/USD slipped by 0.08% to 0.6170 while USD/CAD rose 0.04% on weaker oil. Else, EUR/USD is up 0.03% and GBP/USD is down 0.06%.
North American session
The USD finished little changed after initially trading lower after the February employment report. EUR/USD initially traded up above 1.0980, but settled back to opening levels near 1.0940. USD/JPY also dipped as low as 146.50 before recovering back to 147.10. USD/CAD advanced to near 1.35 after an initial dip to 1.3420 following a strong Canadian employment report.
February’s non-farm payroll increase of 275k was strong though the upside surprise was offset by 167k of net downward revisions to December and January. Other details are softer, a 0.1% rise in average hourly earnings correcting from January’s above trend 0.5% (revised from 0.6%) and a rise in unemployment to 3.9% from 3.7%. The workweek did however rebound from a weather-related dip in January, and that is positive for activity.
Canada saw a stronger than expected 40.7k increase in February employment with details on balance but not wholly positive. Unemployment nudged up to 5.8% from 5.7% while wage data showed some slowing, if not yet fully convincing. As in the U.S., the case for easing in Canada is building but there is little pressing need to act.