Asia Summary and Highlights 27 Mar
Japan’s Finance Minister Katayama signaled a stepped-up policy response to rising market volatility
Trump pauses Iran energy strikes for 10 days
Cyclone Narelle disrupts 8% of global LNG supply from Australia
Asia Session
The broader risk mood seems steady as we head towards the last trading day of the week. Trump pauses Iran energy strikes for 10 days and suggest talks are going well, hopefully not with his imaginary friends. It is still hard to tell what action will actually be one after Trump seems likely to be going dual track, diplomacy and military but market participants are happy there is no immediate escalation. AUD/US is trading 0.27% higher at 0.6906. NZD/USD is trading 0.23% higher while USD/CAD slips 0.06% with Brent and WTI close to unchanged.
As USD/JPY only have an inch distance from the 160 figure, we are hearing more verbal intervention from Japan’s FM Katayama. Apart from the usual rhetoric, we heard G7 finance ministers to hold online meeting on market conditions. USD/JPY is trading 0.09% lower at 159.63 as JGB yields higher across the curve. Else, EUR/USD is up 0.14% and GBP/USD up 0.09%.
European and North American sessions
After being fairly directionless in the European morning, the USD advanced modestly in North America with markets still focused on the Middle East, in particular risk that Trump suggested, of further military action against Iran if it does not agree to his peace terms. Oil advanced, equities struggled and bond yields rose, particularly at the front end. USD/JPY moved above 159.80 from 159.50, and EUR/USD fell to 1.1525 from 1.1560. AUD/USD fell below .69 from .6950 while USD/CAD rose above .1.3850 from 1.3825.
EUR/GBP was little changed after reversing a modest dip but EUR/CHF advanced to .9165 from .9150 and EUR/SEK rose to 10.88 from 10.82. Norges Bank left rates unchanged but switched to a hawkish from a dovish bias. EUR/NOK however largely reversed European losses ending only marginally weaker at 11.18 from 11.22. US initial claims were at expected at 210k from 205k, but continued claims were lower than expected at 1.819m from 1.851m. Later March’s Kansas City Fed manufacturing index increased to 11 from 5.