Asia Summary and Highlights 25 Mar

Asia Session

Australian February CPI has been stalled at 3.7% y/y from 3.8% in January. The more important trimmed mean CPI is at 3.3% y/y, well above target range but has not shown signs of further heating up. However, energy shock will likely push march inflation higher and will not derail speculation of a May hike from the RBA. AUD/USD is trading 0.25% lower at 0.6980. NZD/USD is trading 0.24% lower while USD/CAD rises 0.04%. Both Brent and WTI are slightly lower.

The January BoJ meeting minutes are showing the same rhetoric they have been holding and provided little cues for the next rate hike. The lack of strong commitment from the BoJ is one reason of JPY weakness. There are also headlines circulating on a one month ceasefire between Israel, U.S. and Iran and kept hopes high but Iranians are skeptical. USD/JPY is trading 0.14% higher at 158.91. Else, EUR/USD is down 0.03% and GBP/USD is down 0.09%.

European and North American sessions

FX movements were limited. A USD dip in Europe was fully erased and the USD moved higher in North America after a report that the US was to send 3,000 troops to the Gulf, though this move was mostly corrected with subsequent Trump comments hopeful for a deal with Iran. The troops story lifted oil and UST yields, with the latter also influenced by a weak 2-year auction. Equity moves were modest. 

The troops story saw USD/JPY make a brief push above 159. EUR/USD was fairly stable spending most of the session slightly below 1.16. EUR/GBP made modest gains while EUR/CHF advanced more significantly to 9160 from .9130. AUD/USD was fairly stable near .6970 while USD/CAD saw modest gains to 1.3765.

US March S and P PMIs were mixed, manufacturing rising to 52.4 from 51.6 but services slipping to 51.1 from 51.7. Q4 non-farm productivity was revised down to 1.8% from 2.8% on the recent GDP revision, and unit labor costs revised up to 4.4% from 2.8%, the latter exceeding expectations with wages revised higher.