Asia Summary and Highlights 18 October

Asia session

The September National CPI has shown moderation from August at 2.5% y/y, ex fresh food 2.4% y/y while ex fresh food & energy rose to 2.1% y/y. The BoJ would still be happy to see this as all three items remain above 2% with ex fresh food and energy (non-transitory) items also higher, which seems to support their argument of stronger trend inflation. As USD/JPY moves past 150 figure, we began to hear verbal intervention from the Japanese government. Mimura, the vice finance minister for Japan says recent yen moves are rapid and one sided, the same old rhetoric in verbal intervention. USD/JPY dropped 0.21% to 149.88.

The Chinese Q3 GDP came in at 4.6% y/y but it comes with Q2 quarterly growth revision. Retail sales and industrial production for September both came in stronger. Regional sentiment is mixed with HK and Japanese equity indexes in the green and Chinese equity index little changed initially but improved after the PBoC launched its relenting facility to help listed firm for repurchase and increase share holding. AUD/USD is trading 0.12% higher at 0.6704, NZD/USD is 0.04% higher while USD/CAD is unchanged. Else, EUR/USD and GBP/USD is up 0.1%.

North American session

After the ECB delivered an as expected 25bps ease EUR/USD nudged up briefly to the day’s high of 1.0874 but this had already faded before a stronger than expected set of US data gave the USD a lift. EUR/USD losses extended during Lagarde’s press conference to a low of 1.0811, before a modest correction to around 1.0825. USD/JPY spiked above 150 on the US data, and while this move was not sustained, later in the day USD/JPY strength resumed, settling near 150.25. GBP/USD had moved above 1.30 ahead of the ECB decision and while knocked back below by the US data regained a 1.3 handle later in the day, as EUR/GBP fell to .8320 from .8360. EUR/CHF in contrast was little changed. AUD and CAD were relatively quiet but USD/CAD reached 1.38, and AUD/CAD erased Wednesday’s losses. 

US retail sales rose by 0.4% in September, with a 0.5% rise ex autos and a strong 0.7% rise both ex autos and gasoline and in the control group that contributes to GDP. At the same time Initial claims fell to 241k from 260k and October’s Philly Fed bounced to 10.3 from 1.7. Later data had less impact. A 0.3% decline in September industrial production was due to the Boeing strike and hurricanes each taking 0.3% off the total. October’s NAHB homebuilders’ index saw a second straight monthly rise, to 43 from 41, and August business inventories rose by an as expected 0.3%.