Asia Summary and Highlights 19 Mar

Asia Session

Japan FM Katayama said foreign exchange fluctuations were being driven in part by speculative activity. Another round of verbal intervention as USD/JPY quickly approaches 160 overnight after FOMC. Not much from their end for it is a USD story. I doubt we will be seeing intervention at current level but actual intervention will likely occur if the current pace of rally keep up. Later in the session, BoJ keep rates unchanged at 0.75% as per forecast. They will not hike before results of spring wage negotiation, even when there is likely an oil push spike in inflation. According to their forecast, they still see inflation target to be reached and will be increasing rates. The forward guidance is little changed with April being the earliest call. USD/JPY is trading 0.11% lower at 159.63 with JGB yields higher across the curve.

The broader risk sentiment is not great with regional equities deep in the red and U.S. major equity indexes barely in the green. Precious metal is higher and sees to be suppoorting the Antipodeans as we see AUD/USD 0.26% higher and NZD/USD 0.41% higher. Oil prices slips a few dollars despite the ongoing geopolitical tension. USD/CAD slips 0.05%, EUR/USD is 0.15% higher and GBP/USD 0.12% higher.

North American afternoon

The FOMC left rates unchanged as expected with the median dots unchanged (if slightly more hawkish in the detail). GDP and inflation forecasts were revised higher. The statement saw few changes other than to note the implications of the situation on the Middle East were uncertain. The USD saw a marginal dip though this was more than fully reversed in Chairman Powell’s press conference, who stressed that without progress on inflation in goods that were inflated by tariffs easing would not be seen. USD/JPY advanced to 159.75 and EUR/USD fell to 1.1475. EUR/CHF gains continued, briefly topping .91. AUD and CAD slipped as Powell spoke, but only marginally below their earlier lows versus the USD.