Asia Summary and Highlights 25 April

Asia Session

The Japan April Tokyo CPI rose above 3% with headline at 3.5% y/y, with ex fresh food at 3.4% and ex fresh food & energy at 2% y/y. It is a jump from March and suggest the inflation picture remains choppy in Japan. The BoJ maybe caught between the rock and a hard place where they see hotter inflation and economic development negatively affected by the U.S. tariffs. USD/JPY is trading 0.74% higher at 143.62 as U.S. Treasury and JGB yields depressed.

The broad risk asset market is upbeat on Friday with China reported to be weighing exempting some US goods from tariffs as costs rise. It will be a good sign of a potential beginning of de-escalation since Trump increased the tariff on China to an exorbitant level. Regional equities are outperforming U.S. equities while all are in the green. AUD/USD is trading 0.02% lower at 0.6408, NZD/USD slipped 0.31% lower at 0.5978 while USD/CAD rose 0.14%. Else, EUR/USD is down 0.45% and GBP/USD is down 0.36%.

North American session

While equities advanced and UST yields fell, it was a subdued session in FX, with the USD for the most part stable but seeing some late losses. EUR/USD advanced to near 1.14. In the risk-on environment EUR edged lower versus GBP but advanced versus CHF. AUD/USD edged above 0.64 but USD/CAD rose to test 1.39 before reversing, leaving AUD/CAD firmer at .8875. USD/JPY ended near 142.50 after rising to 142.80 from 142.30. 

US data had limited impact. Durable goods orders surged 9.2% led by aircraft but ex transport orders were unchanged. Initial claims rise to 222k from 216k but remain low. Existing home sales fell sharply by 5.9% to 4.02m. Fed commentary was mildly dovish with Waller stating he would back easing if tariffs led to job losses and Hammack open to a policy shift in June if data justified it.