Asia Summary and Highlights 2 Apr
Jawbone intervention did not curb JPY fall
RBA minutes show there was no discussion of hike
"National Team" seen selling USD/CNY
Asia Session
As USD continue to perform strongly, USD/JPY is challenging recent high at 151.97. U.S. Treasury Yields jumped on Monday and has retraced partial gains so far on Tuesday's Asia session but JGB yields have erase Monday gains. Japan's Suzuki intervened verbally once again but has failed to inspire any JPY strength. It is no doubt we are getting closer and closer to an actual intervention yet instead of a specific level, the pace of rally will be the key factor for the intervention. USD/JPY is trading 0.07% higher at 151.74.
RBA minutes show there was no discussion of hiking the the March meeting. The forward guidance wordings were changed in the last meeting and continue to suggest data dependency as the driving factor for rate path. The current inflation figure does not support a rate decision change in the coming meeting. In sight of USD strength, "National Team" were seen selling USD/CNY to support Yuan. Regional sentiment in Hong Kong is strong but not elsewhere. AUD/USD is trading unchanged at 0.6490, NZD/USD is down 0.14% to 0.5945 while USD/CAD rose 0.09%. Else, EUR/USD is down 0.09% and GBP/USD is down 0.05%.
North American session
The USD opened slightly stronger in response to rising UST yields. Friday’s data had seen February’s core PCE price data come in at 0.2615% before rounding, subdued enough for Fed’s Powell to subsequently welcome the data, though he went on to say that the Fed is no hurry to ease. Overnight Japanese data saw the Q1 Tankan report little changed for manufacturing but with some improvement in services.
Gains in the USD accelerated after March’s ISM manufacturing index bounced to above neutral to 50.3 from 47.8 with prices paid also stronger at 55.8 from 52.5, both the highest since 2022. UST yields advanced by around 10bps across the curve, even with February construction spending falling by 0.3%, a second straight dip to follow 12 straight gains. USD/JPY rose to 151.65 and EUR/USD fell to 1.0740, after opening near 151.25 and 1.08 respectively.
The Bank of Canada’s Q1 business outlook survey showed some easing in inflation expectations though most respondents continue to see inflation above target. The CAD saw no reaction but reflected the generally firmer USD tone, though CAD did outperform the AUD with AUD/CAD dipping to near .88. GBP underperformed as EUR/GBP rose to .8560.