Asia Summary and Highlights 27 Oct
Japan's CS Kihara says important that currencies move in stable manner, reflect fundamentals
Asia Session
The broad risk atmosphere is upbeat to start the week as we hear headlines suggesting a potential de-escalation between U.S.-China. It is widely expected as we do not see a thorough break down in U.S.-China trading. Market sentiment is cheerful with major equity indexes opening higher and Nikkei leading with 2% gains. AUD/USD is trading 0.27% higher at 0.6531, retracing partial opening gains at 0.6538. NZD/USD also opened higher at 0.5777 but has retraced partial gains to 0.5757 while USD/CAD closed the opening gap and is trading 0.05% lower.
The Japan cabinet secretary Kihara starts verbal intervening and says it is important that currencies move in stable manner, reflect fundamentals. While it is not the first time a Japanese official to verbally intervene, the new Japanese cabinet is likely viewed as more dovish and it just seems more like a symbolic move for the government to do than actually looking for strong JPY. USD/JPY is thus trading 0.24% higher at 153.23. Else, EUR/USD is down 0.05% with gap closed and GBP/USD is still up 0.03%.
North American session
US September CPI was weaker than expected, gains of 0.3% overall and 0.2% ex food and energy both 0.1% below the consensus. The USD saw an instant dip, EUR/USD rising to near 1.1650 from 1.1615 and USD//JPY falling to 152.30 from 152.95. The USD dip was however largely reversed, stronger October S and P PMI indices of 52.2 from 52.0 for manufacturing and 55.2 from 54.2 for services providing support. The final October Michigan CSI was revised down to 53.6 from 55.0, but the 5-10 year inflation view was revised up to 3.9% from 3.7%.
EUR/USD corrected to around 1.1630 but remained above pre-data levels. EUR/GBP at .8740 from .8720 was also stronger as GBP/USD returned to pre-data levels near 1.33. EUR/CHF also saw modest gains to .9250. USD/JPY saw a bounce that briefly cleared 153 and settled near pre-data levels. The USD also fully reversed its initial losses versus AUD and CAD, though with equites stronger AUD/USD at .6510 ended slightly above pre-data levels near .65 and USD/CAD at 1.40 ended below pre-data levels near 1.4030. Ontario Premier Ford announced a pause starting Monday on an advert that prompted Trump to exit US-Canada trade talks.