Asia Summary and Highlights 17 Nov
Japan expected to unveil ¥17tn stimulus focused on cost relief and AI–chip investment
Asia Session
Over the weekend, Nikkei reported that the Japanese government is expected to unveil ¥17tn stimulus focused on cost relief and AI–chip investment. It is as widely expected Takaichi is pro-spending and this package seems to be strategical, likely focusing on SMEs, energy rebates and investing in critical area. While it maybe good news for Japanese locals now, it will definitely further weakens the JPY when market look into how the plan will be financed. USD/JPY is trading 0.06% higher at 154.60. Q3 GDP contracted less than expected by 1.8% annualized. Major drag seems to be export while private consumption barely holding on. The highlight for this preliminary data remain on strong CAPEX growth.
Geopolitical tension escalates over the weekend. With U.S. tilted towards branding Cartel de los Soles as a Foreign Terrorist Organization that is led by Venezuelan President Maduro and China issuing travel & study warning to Japan. The broad equity space is performing individually with regional equites lag U.S. peers. AUD/USD is trading 0.2% lower at 0.6522, NZD/USD is trading 0.18% lower while USD/CAD rises 0.03%. Else, EUR/USD is down 0.16% and GBP/USD is down 0.18% with opening gap not closed.
North American session
The USD saw some early weakness as equities opened under pressure, but as equities recovered returned to near neutral. USD/JPY returned to 154.50 after a dip to 153.80 while EUR/USD returned to 1.1620 after rising to 1.1650. EUR/CHF rebounded to .9220 as risk appetite recovered after slipping to .9180, even with the Swiss government announcing a reduction in US tariffs to 15%. EUR/GBP remained slightly softer near .8825.
Canada reported stronger than expected gains of 3.3% for September manufacturing shipments and 0.6% for September wholesale sales ex petroleum. USD/CAD found support around 1.4020 after slipping from 1.4040. AUD/USD near .6540 was up from a low below .6510. Fed talk saw Schmid and Logan Hawkish but Miran dovish, all consistent with their recent tone.