Asia Summary and Highlights 5 Apr

Asia Session

USD/JPY followed the overnight weakness led by concern of geopolitical tension escalation between Iran and Israel. It briefly dipped below 151 figure to 150.81 in the Hong Kong opening hours but was reversed as session progress. Despite cabinet officials and Ueda's verbal intervention attempt, market participants seem to be focused on Ueda's remark on "Impact of past rises in import costs on Japanese inflation likely to dissipate", suggesting potentially lower inflation. U.S. Treasury and JGB yields are rangebound for the session and see USD/JPY slip 0.06% to 151.23.

Headline crossed the wire of potential escalation between Israel and Iran and has dent sentiment in late New York session and was being followed through in Asia session. There has since been little update but regional sentiment remains weak and oil hovering at high. AUD/USD is down 0.27% to 0.6569, NZD/USD is also down 0.27% to 0.6009 while USD/CAD is up 0.22% 1.3572 as oil slip a few cents. Else, EUR/USD is down 0.09% and GBP/USD is down 0.13%.

North American session

The USD saw a volatile North American session, particularly late in the session on talk of a potential near term Iranian attack on Israel. This hit stocks and UST yields, the UST move led by the front end despite the day’s Fed speak having been somewhat hawkish, particularly Kashkari who said the Fed might not ease this year, while others cautioned about recent strong data and the need for caution over easing. 

USD/JPY fell by over 50 pips below 151.20 but risk off trading saw USD/CAD bounce from around 1.35, already off its lows, to above 1.3550, while AUD/USD slipped back to .6585 from highs near .6620. 

EUR/USD and GBP/USD more than fully reversed modest early gains triggered by US data, when initial claims rose to 221k from 212k and the trade deficit increased to $68.9bn in February from $67.6bn in January.  EUR/CHF erased gains seen after the Swiss CPI while USD/CHF completed a reversal of its earlier gains.