Asia Summary and Highlights 14 February

Asia Session

The reversal in USD/JPY continues as "sell the fact trade" kicks in after Trump's announcement of reciprocal tariff seems to be on the softer side. JGB yields are outperforming their U.S. Treasury counterpart, which will likely be supportive for the JPY. Japan chief cabinet secretary Hayashi says will respond appropriately to US tariffs but has not and does not seem likely to retaliate with more tariffs after the first U.S.-Japan summit. USD/JPY is trading 0.07% lower at 152.68.

The risk sentiment is broadly positive on Friday after Trump's announcement on reciprocal tariff is viewed to be softer than most expect. The HSI is leading with more than 2% of gains while Nikkei lags. USD is trading individually against major currencies. AUD/USD is up 0.03% at 0.6319, NZD/USD rose 0.14% to 0.5685 while USD/CAD slips 0.03%. Else, EUR/USD is down 0.13% and GBP/USD is down 0.11%.

North American session

US PPI was on the firm side of consensus at 0.4%, though core rates at 0.3% were on consensus. Despite this, and a fall in initial claims to 213k from 220k, UST yields slipped, with economists noting that the PPI components that contribute to core PCE price data were quite subdued. The USD saw little initial reaction to the data, but later slipped ahead of a scheduled Trump tariff announcement.  

On Trump’s announcement the USD saw a bounce, with EUR/USD briefly fully erasing its gains, perhaps due to Trump stating European VAT rates were seen as a tariff. However, the move was quickly reversed with the tariffs not set for immediate introduction and USD losses extended in late trade. EUR/USD advanced above 1.0450 from 1.0375 while GBP/USD moved above 1.2550.  USD/JPY fell below 153 from 153.80. AUD/USD moved above .63 while USD/CAD slipped to near 1.42. Equities were stronger.