Asia Summary and Highlights 17 Apr

Asia Session

As RBNZ has previewed, NZ Q1 CPI came in at 4% y/y, continues to moderate but well above RBNZ target. While RBNZ has put the blame on transitory factor, it no doubts delay the step of potential easing as we see the bank has delayed the first cut from end of 2024 to start of 2025. Kiwi cheers on the hot CPI and see NZD/USD trades 0.29% higher at 0.5898 while AUD/USD trade 0.07% higher at 06406 and USD/CAD rose 0.05% with oil down half a dollar.

While we continue to hear more jawboning from Japanese officials, the shine for Japan lies in another strong export report. Japan March exports came in at +7.3% y/y, expanding four month in a row with exports to China leading the gains. It shows the merit of a soft JPY. However, we see import contracts which is the downside for weaker JPY and also showing a soft domestic demand from Japan. USD/JPY is taking a break and trades 0.07% lower at 154.6 with both the U.S. Treasury and JGB yields higher. Else, EUR/USD is down 0.07% and GBP/USD is up 0.06%.

North American session

The USD saw little reaction to US data, a sharp 14.7% fall in housing starts and an as expected 0.4% rise in industrial production, with manufacturing stronger than expected with a 0.5% increase. Comments from Fed’s Jefferson, saying rates may have to stay higher for longer, did give the USD some support. However USD/JPY suddenly saw a sharp fall from near 154.75 to near 154, which appeared to reflect market nerves rather than actual intervention, and the plunge was subsequently reversed. 

USD/CAD saw a bounce above 1.38 on Canadian CPI data that saw the BoC core rates fall, despite rising to 2.9% from 2.8% as expected overall. BoC Governor Macklem later stated inflation was heading in the right direction. 

Macklem was speaking with Fed’s Powell, who stated that recent inflation data showed a lack of further progress and that if inflation persisted rates could remain at the current levels as long as needed. The USD bounced on the remarks, EUR/USD testing 1.06 and GBP/USD getting close to 1.24, though the response from USD/JPY was cautious. The USD bounce was quickly reversed, which appeared to be a response to the 2yr UST yield failing to hold a break above 5%. The USD ended mostly little changed, but sustained its gains versus the CAD.