Asia Summary and Highlights 18 Nov
Japan’s Finance Minister Katayama “alarmed” by recent FX moves
Asia Session
Japan’s Finance Minister Katayama says she is “alarmed” by recent FX moves and noting one-sided, rapid shifts in the currency. It is an escalation of verbal intervention as USD/JPY is once again on its way to historical high. The one way traffic is well anticipated with PM Takaichi's fiscal spending plan and worsen this week after another big stimulus package announced. USD/JPY retreated from 155.37 session high on the warning to trading 0.05% lower at 155.09.
The broad risk sentiment is poor on Tuesday with regional equities indexes underperforming U.S. equities indexes , though the later are also under water by more than half a percent. The risk off tone seems to be set on A.I. evaluation concern and anticipation changes on December Fed rate cut, there is also a chance market participants are worry about rising 10yr JGB yields (1.75%), a level last seen in 2008. AUD/USD is trading 0.25% lower on 0.6477, NZD/USD is trading 0.13% lower at 0.5650 while USD/CAD slips 0.03%. Else, EUR/USD and GBP/USD are up 0.06%.
North American session
Equities came under pressure meaning risk off trade, USD/JPY breaking to a new post-February high at 155.30 while AUD/USD slipped below .65. USD/CAD moved up to near 1.4060 from 1.4025. Most of the AUD and CAD losses came late in the session, though USD/CAD was marginally firmer after Canadian CPI fell to 2.2% yr/yr from 2.4%, not quite as soft as expected, but with softening in the BoC’s core rates, CPI-Median and CPI-Trim. EUR/JPY tested 180 but failed to break, with EUR/USD marginally lower at 1.1590 from 1.16.
The USD released delayed August construction spending data, which with a 0.2% rise was firmer than expected, particularly given upward revisions to June and July. Late in the session Fed’s Waller gave a clear call for a 25bps December easing, but got little FX response. Earlier comments from Fed’s Jefferson were cautious and balanced.