Asia Summary and Highlights 20 March

Asia Session

As Asia market participants digest the result of FOMC meeting, we are hearing from Trump that he thinks the Fed should cut rates as tariffs hit the economy. His take will increase policy uncertainty but also seems to be supportive for the U.S. equity market, at least for now. USD/JPY is trading 0.21% lower at 148.36.

Regional sentiment is performing worse than the U.S. equity. The Australia Feb headline Employment Change has missed estimate at -52.8K with employment unchanged but participation rate slumped. However, given the history of solid Australian labor market, one bad report does not guarantee the downfall of the labor market and will need further confirmation in the coming months. AUD/USD is down 0.28% to 0.6338. The New Zealand Q4 GDP is 0.7% y/y, returned to growth after two quarters of contraction by remains -1.1% y/y. NZD/USD is down 0.46% as it does not derail RBNZ's easing path while USD/CAD rose 0.05%. Else, EUR/USD is down 0.05% and GBP/USD is down 0.07%.

North American session

Ahead of the FOMC decision, the USD extended its European gains in generally subdued trade, most notably against EUR/USD which fell to 1.0865 while USD/CAD gains came close to 1.4350.  

The FOMC left rates on hold as expected and the median dots were unchanged. Growth forecasts were revised down for 2025, 2026 and 2027 but inflation was revised higher for 2025. A slowing in the pace of QT for USTs was announced for April. The market took the announcement as dovish, with equities rallying and UST yields falling, and that persisted through Powell’s press conference sending the USD lower.  USD/JPY fell below 149 from around 150. Moves were more moderate elsewhere with a correction into the close, but GBP/USD rose to 1.30, and EUR/USD recovered to 1.09. AUD/USD largely erased earlier losses rising to .6350 though USD/CAD slippage was unable to breach 1.43.