Asia Summary and Highlights 20 Oct
The LDP and Japan Innovation Party have reached a broad agreement to form a coalition government
New Zealand Q3 CPI +1% q/q and +3% y/y
Asia Session
Over the weekend, the LDP and Japan Innovation Party have reached a broad agreement to form a coalition government. It almost guaranteed the PM candidate they introduce will be elected, if there is a run-off. There hasn't be significant changes in rate pricing despite Takaichi likely be the next PM and we see USD/JPY trading unchanged at 150.59 after a jump to 151.20 in earlier Asia. JGB are also outperforming U.S. Treasury in yields.
The Q3 New Zealand CPI has come in higher as expected at +3% y/y. The stronger CPI was previewed by the RBNZ in the last meeting, which they see only short term volatility. The RBNZ is still looking toward one more rate cut in 2025 and a 3% y/y may not be enough to stop but slow them. NZD/USD is trading 0.23% higher at 0.5736. The broad risk sentiment seems upbeat, leading by regional equities in Hong Kong and Japan. AUD/USD is trading 0.11% higher at 0.6503 while USD/CAD slips 0.07%. Else, EUR/USD is up 0.19% and GBP/USD is up 0.09%.
North American session
Comments from Trump that 100% tariffs were not sustainable early on eased trade worries and while equities were choppy USD/JPY was lifted to 150.50 from 149.85 and AUD/USD to .65 from .6470. USD/CAD also moved lower, if later on the session as equities gained strength, to 1.4015 after rising to 1.4050.
EUR/USD saw modest losses to 1.1670 from near 1.17 but a dip in GBP/USD below 1.34 was not sustained. EUR/GBP slipped to .8685 from .87. EUR/CHF was stable near .9250.