Asia Summary and Highlights 19 March
BoJ kept rates unchanged
Asia Session
The JPY was already softening before the BoJ interest rate decision with no expectation to change of rates and a glimpse of hope for hawkish forward guidance that is likely to be disappointed. The Japan February exports increased by 11.4% y/y while import contracted by 0.7% y/y, continues to point to weak private consumption. The Bank of Japan has left policy unchanged as expected at 0.5% with little forward guidance. They seems to be optimistic about consumer spending despite inflationary pressure and limited evidence to show momentum from household spending. The BoJ only sees inflation expectation to be align in a medium run, which is an interesting take after they hike in January and would be up to be interpretation for Ueda in his press conference. USD/JPY is trading 0.23% higher at 149.6 despite JGB yields outperforming U.S. Treasury yields.
The equity space is steady on Wednesday as we had little market moving headline except the BoJ's interest rate decision. Major equity indexes are in the green but not by much. USD is trading broadly higher and see AUD/USD down 0.07% to 0.6356, NZD/USD is also 0.12% lower at 0.5812 while USD/CAD rose 008%. Else, EUR/USD is down 0.08% and GBP/USD down 0.1%.
North American session
US data was on the strong side of expectations with a 11.2% rise in housing starts and a 0.7% increase in industrial production. The USD saw some early strength with EUR/USD slipping briefly below 1.09 and USD/JPY getting close to 150, but with equities and UST yields subsequently slipping USD/JPY slipped back to 149.10. EUR/USD returned to 1.0950 near European highs while GBP/USD managed a fresh high above 1.30. German fiscal reform was passed and Russia agreed to a 30-day truce on Ukrainian energy infrastructure, but not a full ceasefire.
Equity weakness weighed on the commodity currencies, though AUD/USD was only marginally weaker after seeing a brief dip below .6350. A rise in Canadian CPI to 2.6% from 1.9% helped USD/CAD see a low of 1.4270 but a rebound above 1.43 followed.