Asia Summary and Highlights 18 February

Asia Session

Market participants were pricing in a RBA cut on Tuesday and was seen front running the move to offer the Aussie against the USD. The RBA decided to cut the cash rate by 25bps to 4.1% in the Feb 18 meeting, seeing rates remain restrictive after the cut and signals data dependency going forwards. RBA has also revised inflation forecast for the first half of 2025 lower to 2.4% y/y from 2.5%, trimmed mean at 2.7% from 3% but revised 2026/27 headline inflation higher. They see cash rate to be at 3.6% by year end 2025 and at 3.4% June 2026 before returning to 3.5%, a terminal rate so far. The key change of stance from RBA came from softer than expected inflation and GDP growth. AUD/USD was once down 0.38% at 0.6335 and was seen reversed to recoup partial gains at 0.6355, NZD/USD was also dragged 0.54% lower at 0.5705 while USD/CAD rose 0.18%.

The USD is trading broadly higher on Tuesday. Initially, USD/JPY dipped on Japanese FM's comment on the Q4 GDP but quickly reversed higher as session progress. USD/JPY is trading 0.38% higher at 152.07 with both the U.S. Treasury and JGB yields higher. Else, EUR/USD is down 0.3% and GBP/USD is down 0.25%.