Asia Summary and Highlights 15 Apr
Iran attacks Israel over the weekend
Risk of escalation but seems to be better than some expected
Asia Session
Over the weekend, Iran's attack on Israel materialized with hundreds of missiles and drones but most have been intercepted. With Iran's official comment "it can be concluded", market seems to be on the calm side as the assault could have been much worse. The U.S. also "leaked" they do not support an Israel retaliation, which may reduce the risk for an escalation. USD outbids the JPY in times like this with a level of safety while enjoying a higher yield. Japan finance minister Suzuki continues with his jawboning and its fruitless result may see actual intervention coming in shortly, given the pace of weakness in JPY. USD/JPY reached another new high at 153.82 after closing the opening gap, up 0.41% for the day with U.S. Treasury Yields outpacing JGB yields.
The new sanction from US and UK banning deliveries of any Russian Aluminum and Nickel produced after midnight on Friday, has driven the corresponding metal higher. Regional equities are performing individually with Chinese equities outperforming Hong Kong and Japan with China keeping MLF rate unchanged. The Aussie benefited from all of these and led rivals against the USD to trade 0.35% higher at 0.6485, NZD/USD is is 0.17% higher at 0.5946 while USD/CAD slipped 0.09%. Else, EUR/USD is down 0.13% and GBP/USD is up 0.1%.
North American session
The USD traded higher through the North American session, steadily against most currencies though USD/JPY saw an early slide to a low of 152.59 largely reversed, returning to around 153.25. Equity weakness was the focus given fears that Iran might shortly attack Israel, with additional anxiety over banking sector earnings. AUD/USD was particularly weak, falling to .6460, while USD/CAD rose to 1.3775. EUR/USD stabilized in the afternoon after reaching a low of 1.0623 while GBP/USD bottomed at 1.2427, as EUR/GBP reversed European losses.
News had little impact. April’s preliminary Michigan CSI dipped to 77.9 from 79.4 but the 5-10 year inflation view rose to 3.0% from 2.8%. The most notable Fed speaker was probably Schmid, who sounded quite hawkish suggesting rates would stay higher for longer. Collins, Goolsbee, Bostic and Daly also spoke, but their tone was similar to their recent comments, also with few dovish signals.