Asia Summary and Highlights 4 March

Asia Session

The OPEC+ has agreed to extent output cuts by another quarter with Saudi Arabia's extra voluntary cut to end in June 2024. The decision will keep supply at current level while the season is heading into summer. Oil gap and continued to trade higher at Monday's open in reaction to the headline but has since erased most of their gains yet the gap is not closed. USD/CAD gap around 10 pips lower and has reversed losses to trade 0.05% higher at 1.3562.

As we come closer to the all important spring wage negotiation, any headlines will be market sensitive as they may sway BoJ's policy decision. Japanese media Mainichi and Kyodo reporting Japan gov't mulls declaring official end to deflation, which initially saw a dip in the pair but does not seems to have a lasting impact because it would be more a move of gesture to prepare the public for a move in monetary policy. The direction changed as session progress, U.S. Treasury Yields are higher while JGB yields lower. USD/JPY is now trading 0.14% higher at 150.26.

Australia Melbourne Institute Inflation for February came in at -0.1% m/m lowered from +0.3% in January. It should support RBA's rate path to keep it on hold. AUD/USD is down 0.1% to 0.6518, NZD/USD 0.14% lower at 0.6098. Elsewhere, EUR/USD and GBP/USD are up 0.08%.

North American session

European currencies lost ground through the North American session. EUR/USD dipped back to see lows below 1.08, dropping around 40 pips, while USD/JPY was net little changed near 150 having dropped around 80 pips to 149.20 early in the session. The USD initially fell back across the board after a modest rise in jobless claims data helped to push yields lower, but recovered by the end of the session. The jobless claims was released at the same time as a 0.4% rise in core PCE prices, which while significantly firmer than recent trend was on consensus. A 0.2% rise in personal spending was also on consensus and while a 1.0% rise in personal income was stronger than expected, disposable income was restrained to a 0.3% increase by higher tax payments.

The USD fell against the CAD from near 1.36 to below 1.3550 after modestly better than expected Canadian GDP data but corrected over half of the move late in the session. Canada’s Q4 GDP increase of 1.0% annualized was stronger than expected, and Q3 was revised up to -0.5% from -1.1%, meaning the drop has been more than fully reversed. However the details of the Q4 data fail to impress, with a decline in domestic demand and a weaker than expected unchanged outcome for December, though preliminary signals for January are positive.