Asia Summary and Highlights 7 Mar
Japan January Cash earnings +2% y/y, expected +1.3%, prior +0.8%
Australian January exports +1.6% m/m (prior +1.8%) & Imports +1.3% (prior +4.8%)
Asia Session
Japan's labor cash earning finally reached 2% for January. January Cash earnings came in at +2% y/y with expected at +1.3% and prior +0.8%. While real wage growth remains negative, the headline growth is good enough in BoJ's eye to be supportive for a sustainable trend inflation. Japan's largest industrial union UA Zensen said that wage hikes negotiated so far has been stronger than last year, so far full-time workers has negotiated for a 6.7% including base pay rise of 5.15%. If such is the scenario, it will be of great support towards BoJ's decision in moving monetary policy away from ultra-loose. USD/JPY is down more than half a percent by 0.53% to 148.57 with JGB yields rising more than U.S. Treasury yields.
The Australian February headline trade balance is stronger than in January but confirms the turn in domestic demand as import growth weakens to 1.3% from 4.8%. It does not mean the Australian economy is weak but suggest consumption would be as supportive in economics growth as it does in the 2023 when rate hikes and inflationary pressure seem to be neglected by Australians. While regional sentiment remains soft, AUD/USD benefited from softer USD and is trading 0.2% higher at 0.6577, NZD/USD also 0.22% higher at 0.6142 while USD/CAD barely lose 0.02%. Else, EUR/USD is up 0.03% and GBP/USD is 0.02%.
North American session
The USD fell back through the North American session as the market took the testimony from Fed chair Powell as being on the dovish side of expectations. Even though we saw his comments as being if anything slightly hawkish relative to market pricing, US yields fell back slightly in response to his saying rate cuts this year were likely, and the USD fell back in line. EUR/USD traded up above 1.09, gaining around 30 pips on the session, and USD/JPY fell around half a figure to 149.30. The USD edges marginally off its lows in late trade, but remained down on the day.
The CAD was the strongest performer on the session, with USD/CAD falling nearly a big figure to 1.35 after the BoC left rates unchanged and governor Macklem indicated that it was still too early to ease policy.
US ADP employment and JOLTS job openings data were not far from expectations. The Fed’s Beige Book saw slightly stronger growth in activity, but some easing of inflationary pressures.