Asia Summary and Highlights 25 October
Tokyo Headline CPI lower but ex fresh food and energy higher
Escalation of verbal intervention from Japanese Giannce minister
Asia Session
The Tokyo headline CPI for October has come in lower at 1.8% y/y. However, ex fresh food and energy CPi also rose to 1.8%. The mixed report will not derail BoJ's monetary policy as it suggest trend inflation is indeed higher. But with headline lower, the pace of further tightening may be slowed. We are hearing more verbal intervention and an escalator rhetoric from Mimiura, the vice finance minister of ministry, citing one sided and speculative moves. The September Service PMI remains high at 2.6% y/y. USD/JPY is 0.12% lower at 151.64 as the U.S. Treasury yields fall while JGB yields higher.
The risk sentiment is mixed on Friday’s Asia session as Chinese, Hong Kong and in the green while Japanese and U.S. three major equity indexes in the red. AUD/USD is trading 0.28% lower at 0.6621 after treating a session low at 0.6628, NZD/USD is 0.36% lower at 0.5993 while USD/CAD is unchanged. Else, EUR/USD is down 0.04% and GBP/USD is down 0.09%.
North American session
US data, most importantly a fall in initial claims to 227k from 242k, back to pre-hurricane levels, but also modest gains in S and P PMIs and new home sales, was on the firm side of expectations. However the USD performance was mixed, and overall slightly weaker. EUR/USD advanced from 1.08 to 1.0825 and with GBP/USD peaking near 1.2990 EUR/GBP erased earlier losses. EUR/CHF advanced to .9375 from .9345. USD/JPY slipped as far as 151.55 but ended little changed near 151.85. USD/CAD advanced above 1.3850 from 1.3815 though losses in AUD/USD were eventually marginal, to .6640 from .6655.