Asia Summary and Highlights 28 February
Japanese labour unions push for record wage hike amid rising costs
Tokyo February headline CPI +2.9% y/y
Asia Session
The Tokyo headline CPI has come in lower than expected at 2.9% y/y with ex-fresh food at 2.2% and ex-fresh food & energy at 1.9%. It is still a high read but seems to suggest the spike in inflation has eased and could hinder the pace of more BoJ hike. The sentiment turmoil seems to be in the driving seat on Monday as we see USD/JPY down 0.12% to 149.61 with a session low at 149.09 with JGB yields falling harder than U.S. Treasury Yields, reacting to Japan PM Ishiba's government cuts FY25/26 Budget plan to JPY 115.2tln which includes reduction in new government bond issuance to 28.6tln yen.
In the last trading day of the week, we are seeing the equity space to continue its bleeding. While it seems to be following overnight slump from the U.S. equities, the uncertainty of Trump's tariff policy no doubt is dimming regional outlook. Japanese equities are leading the losses, followed by HSI, U.S. major equity indexes are performing better than Chinese counterpart but remain in the red. AUD/USD is down 0.39% to 0.6212, NZD/USD fell more by 0.53% while USD/CAD edged 0.07% higher. Else, EUR/USD is down 0.12% and GBP/USD is down 0.16%.
North American session
The USD advanced after Trump stated that tariffs on Canada and Mexico would go ahead on March 4, contradicting what he said on Wednesday. USD/CAD bounced to 1.4440 from 1.4365, but the USD gains were broad based, with AUD/USD losses to .6240 from 0.63 meaning AUD/CAD was lower. EUR/USD fell to 1.04 from 1.0480 with the EU continuing to attract hostile comments from Trump. The USD advanced versus GBP and CHF, but EUR/GBP near .8250 and EUR/CHF near .8360 were weaker. USD/JPY saw less movement, remaining firm but struggling to hold above 150.
Mixed USD data generated little reaction but included a sharp rise in initial claims to 242k from 220k, and an upward revision to Q4;’s core PCE price index to 2.7% from 2.5% despite GDP being unrevised at 2.3%. Durable goods orders rise by 3.1% on aircraft with ex transport orders unchanged, and pending home sales saw a second straight steep decline, by 4.6%.