Asia Summary and Highlights 6 February
BoJ hawk Tamura says BoJ must raise short-term interest rates to at least 1% by the H2 fiscal 2025
Asia Session
On Thursday, we are seeing a relatively calmer start as we didn't hear anything new from tariff man. The Australian trade balance has come in softer at AUD 5085mn, with import beating export, suggesting a moderate recovery in consumption. Major equity indexes are mostly in the green with regional indexes leading and see AUD/USD down 0.31% at 0.6265, NZD/USD also down 0.33% to 0.5668 while USD/CAD rose 0.2% on soft oil.
BoJ hawk Tamura says that BoJ must raise short-term interest rates to at least 1% by the H2 fiscal 2025 and has kept JPY strong. While we are only two full hikes away from 1%, the hawkish rhetoric further reinforce market participants anticipation of another rate hike soon. USD/JPY is trading 0.18% lower at 152.31, creating the new yearly low at 151.80. Else, EUR/USD is down 0.15% and GBP/USD is down 0.12%.
North American session
US data showed a stronger than expected 183k increase in January’s ADP employment report, a $98.4bn December trade deficit that was even wider than expected, and a dip in January’s ISM services index to 52.8 from 54.0. The latter figure did assist a dip in USD/JPY to a low of 152.12 from 152.80 though the USD later recovered to near pre-data levels.
EUR/USD’s reaction to the data was very brief and kept to a narrow range near 1.04. USD/CAD corrected back to 1.4325 from a low of 1,4270, seeing AUD/CAD rise to .90. AUD/USD gains stalled near .63.