Asia Summary and Highlights 11 Apr
Japan finance minister Suzuki says Forex levels are basically determined by markets
Asia Session
As the aftermaths of higher U.S. CPI, USD/JPY has once again reached new highs above 153 figure. Suzuki came up with an escalation of rhetoric by suggesting close communication with Kanda, who executes intervention, to try and curb the JPY's weakness. However, he followed up with a remark that forex levels are basically determined by markets and suggest weak JPY has its pros and con. It does not sound like someone who is ready to pull the trigger. U.S. Treasury Yields are taking a breather while JGB yields continue to climb, USD/JPY is trading 0.156% lower at 152.90.
Regional risk performs individually while U.S. equity indexes recovered a tad. Chinese March CPI came in lower than estimate and we see the PBoC once again fixed the onshore Yuan much stronger than expected to curb CNY losses. AUD/USD benefited from these factors, along with solid commodity and higher consumer inflation expectations to trade 0.15% higher at 0.6522, NZD/USD also 0.21% higher at 0.5987 while USD/CAD slipped 0.04% to 1.3676.. Else, EUR/USD is up 0.03% and GBP/USD is up 0.06%.
North American session
The US session saw the USD rally by around 1.0% on a stronger than expected US CPI, where both the headline and core rose by 0.4%, the latter the third straight 0.4% increase, though at 0.359% before rounding the difference from consensus was modest. Around half the FX move came in the knee-jerk reaction to the release which subsequently extended before stabilizing in the afternoon. FOMC minutes from March 20 had little impact, with respondents expecting inflation and growth to slow and outlining plans to slow the pace of balance sheet reduction.
USD/JPY rose to near 153.00 from 151.85 and EUR/USD fell to 1.0740 from 1.0860. EUR saw modest gains versus GBP while seeing little direction versus the CHF. AUD/USD fell particularly sharply, to 0.65 from 0.6620. AUD/CAD fell to .89 from 0.8980, despite a BoC statement that sounded more optimistic on inflation while leaving rates unchanged. USD/CAD rose from 1.3565 to briefly touch 1.37. Most of the move was in response to the US CPI but CAD did extend losses after BoC Governor Macklem said a June rate cut was possible.