Asia Summary and Highlights 16 Feb
BOJ Ueda says will consider policy move when inflation target conditions met
Suzuki's verbal intervention sounds weak
Asia Session
The ebbs and flow of USD has seen the USD/JPY going up and down the 150 handle. FX intervention has been an effective deterrent for speculators stretching their position against the JPY but the latest verbal intervention from Suzuki hints inaction as he said weak JPY has its pros and con. While this is understandable for there should be a fundamental shift soon in the BoJ monetary policy, this softness seems to have open the green light for a slow grind upwards in USD/JPY. Still, any sharp spike will be met with potentially intervention as it is the most unfavorable for the BoJ, compared to a slow weakness in the JPY. U.S. Treasury Yields are higher across the curve while JGBs yields are also in the green. With broad USD strength, USD/JPY recaptured the 150 handle and is trading 0.29% higher at 150.33.
Risk sentiment is performing individually with regional equity indexes mostly positive and U.S. 3 major equity indexes down a tad. Yet, the broad strength of USD has outweighed positive mood and see AUD/USD down 0.16% to 0.6514, so as NZD/USD down 0.15% to 0.6096 while USD/CAD rose 0.15%. Elsewhere, EUR/USD is down 0.13% and GBP/USD is down 0.17%.
North American session
The USD fell back through the North American session following weaker than expected retail sales data. A brief USD recovery in mid-session faded in the afternoon. Retail sales fell 0.8% headline, 0.6% ex autos, and while some of the weakness may have been due to weather, it was enough to pit the USD on the back foot, mainly against the riskier currencies. USD/CAD saw the biggest move, falling over half a figure to 1.3470, while EUR/USD moved up around 35 pips to 1.0770. GBP/USD more than reversed earlier losses, testing 1.26. USD/JPY initially dipped, but finished not much changed.
Other US data released with retail sales, the Philly Fed survey, NY Empire state survey and jobless claims data were stronger than expected and moderated the impact of retail sales. Later industrial production with a 0.1% decline, with manufacturing down by 0.5%, was weaker than expected with bad weather cited, but the NAHB homebuilders’ index extended its recent recovery above expectations.