Asia Summary and Highlights 3 Feb
US cuts tariffs on India to 18% as New Delhi agrees to end Russian oil purchases
Asia Session
The broader risk mood further improves on Tuesday as we heard from Trump that U.S. will cut tariffs on India to 18% as New Delhi agrees to end Russian oil purchases. The risk mood has already improved overnight and is seeing further momentum in Asia. It looks like the fear shock is out of the picture for now and market participants are rushing in again. USD/JPY is trading 0.11% lower at 155.42, a haircut from the continuous verbal intervention effort from Japanese officials.
As most market participants expected, the RBA hike rates by 25bbps to 3.85%. More importantly, the cash rate forecast is showing two more rate hike in this year, more hawkish than what was being priced in the market. AUD/USD jumped 1.01% to 0.7018. NZ/USD is also dragged 0.71% higher while USD/CAD slides 0.17%. Else, EUR/USD and GBP/USD are up 0.21%.
North American session
After a subdued European morning the USD gained momentum in North America, both before and after a January ISM manufacturing index of 52.9, up from 47.9 in December and the strongest since August 2022. USD/JPY rallied to 155.70 from 154.80 while EUR/USD fell to 1.1785 from 1.1870. EUR/GBP to .8630 from .8660 but EUR/CHF advanced to .9190 from .9160. USD/CAD advanced from 1.3630 to briefly touch 1.37 but AUD/USD was fairly stable near .6950.
The Labor Dep’t announced that because of a partial government shutdown the January non-farm payroll scheduled for Friday would be delayed. President Trump announced a trade deal with India.