Asia Summary and Highlights 5 March
China has suspended soybean import licenses for three US firms and halted US log imports
Australian Q4 2024 GDP +0.6% q/q
Asia Session
The market stays lively with the ebb and flows of tariffs and retaliation. Australian Q4 GDP beats estimate by a touch but the choppy sentiment and stronger USD has overshadowed the data for the Aussie. Regional equities are outperforming their U.S. counterpart with the HSI leading while U.S. major equity indexes are in the red. AUD/USD is down 0.36% to 0.6248, NZD/USD down 0.3% to 0.5674 while USD/CAD rose 0.23%. There were a slate of potential measures that is going into the Chinese National People’s Congress for consideration but does not seem to affect market sentiment for now.
After a roller coaster session on Tuesday, the USD/JPY is relative quiet/undecided on Wednesday. The BOJ Deputy Governor Uchida says if forecasts met the Bank will adjust policy further, the same hawkish rhetoric he has been stating for a while and has provided little new impetus on a timeline. JGB yields are outperforming the U.S. Treasury Yields and see USD/JPY up 0.02% to 149.81. Japan FM Kato says he has shared views with US counterpart on FX rates but we have not heard anything new from the U.S. side yet. Else, EUR/USD is down 0.05% and GBP/USD is down 0.04%.
North American session
Early trade saw equities falling sharply on tariff concerns and USD/JPY fell to a low of 148.10. However, equities erased most of the losses, and EUR/USD got a boost on a German plan to reform the debt brake to allow for a EUR 500bn defense fund. Reuters also reported that Trump was planning to announce minerals deal with Ukraine in his evening address to Congress. EUR/USD advanced from an early dip below 1.05 to above 1.06. EUR/GBP moved up to near .83, but GBP/USD rallied to near 1.28 from near 1.27. USD/JPY recovered above 149.
USD/CAD was volatile as PM Trudeau detailed Canada’s retaliatory tariffs, prompting Trump to threaten still more US tariffs in response. After bottoming near 1.44, USD/CAD rose to 1.4540 before correcting back near 1.4470 as risk appetite improved. AUD/USD found support near 0.62 and rallied above .6250 as AUD/CAD reached .9050. There was no significant data, but Fed’s Williams said tariffs would have a high pass-through to consumers.