Asia Summary and Highlights 4 February

Asia Session

In late North America session, Trump announced that he will also delay the tariff on Canada to give time for negotiation, similar to Mexico, after a talk with Trudeau. The focus of the Asia session is on the 10% Chinese tariff that will be imposed soon and market participants are waiting to see if a Canadian/Mexican style 30 days negotiation period will be announced. USD is going higher to prepare for the worst with U.S. Treasury Yields higher in the front end. USD/JPY is currently trading 0.23% higher at 155.05.

Regional sentiment is still faring better than U.S. equity space while waiting for the result whether Chinese tariffs will be imposed. HK and Japanese equities are up more than a percent but have retraced from high while U.S. equity indexes are in the red. AUD/USD is down 0.65% to 0.6186, NZD/USD is also down 0.67% while USD/CAD rose 0.4% as oil weakens and USD solid. Else, EUR/USD is down 0.55% and GBP/USD is down 0.46%.

North American session

The main news of the North American session was that Trump delayed tariffs on Mexico until March 1 in return for a Mexican commitment to send 10,000 Mexican troops to the borders to control inflows of drugs and illegal immigrants. Data did not deliver much response. While there was no suggestion tariffs on Canada would be delayed, USD/CAD fell a big figure to around 1.4570. EUR/USD jumped above 1.03 from 1.0260 before settling near the figure. With equities moving off the lows, USD/JPY bounced from a low of near 154 to briefly touch 155, before slipping back to 154.75. Trump was speaking to Canadian PM Trudeau in the afternoon. 

A stronger than expected ISM manufacturing index of 50.9 from 49.2 had little impact. Fed’s Collins and Bostic expressed uncertainty over the impact of tariffs and stated they were in no hurry to ease policy further.