MNI EUROPEAN OPEN: Indonesia Rupiah Falls To Multi-Decade Lows

EXECUTIVE SUMMARY

• TRUMP SAYS AUTO TARIFF COMING, TEASES RECIPROCAL DUTY BREAKS - BBG 
• ECB’S ESCRIVA SAYS DOWNSID RISKS ARE OUTWEIGHING UPSIDE RISKS - BBG 
• BOE BAILEY - AI A WAY OUT OF UK’S LOW PRODUCTIVITY - MNI BRIEF 
• BOJ HOLDS CAUTIOUS VIEW ON FUTURE HIKES - JAN MINUTES - MNI 
• MNI DISCUSSES CONSUMPTION CHALLENGES WITH TOP CHINA ADVISORS - MNI 
• INDONESIAN RUPIAH TUMBLES TO LOWEST SINCE ASIAN FINANCIAL CRISIS - BBG 

Fig 1: USD/IDR To Fresh Highs Since 1998 Asian Financial Crisis 

Source: MNI - Market News/Bloomberg/Refinitiv. 

UK 

BOE (MNI BRIEF): Bank of England Governor Andrew Bailey on Monday highlighted the weakness of UK productivity growth and labour supply in a speech at Leicester University, without addressing current monetary policy.

HOUSING (BBG): “Chancellor of the Exchequer Rachel Reeves said she’ll put £2 billion ($2.6 billion) of grant funding into social and affordable homes as the UK’s Labour government works toward a target of building 1.5 million new residences over five years.” 

EU 

ECB (BBG): “Risks to euro-zone economic forecasts are more to the downside than the upside, according to European Central Bank Governing Council member Jose Luis Escriva. “The more disruptive scenarios aren’t materializing,” the Spanish central bank chief said. “That doesn’t mean they couldn’t take us by surprise. We need to be readier than ever to revise our forecasts, therefore the relevant caution.”

GERMANY (DW): “The center-right and center-left parties have ended their first round of talks on time. Despite news of "good progress," sticking points on issues such as taxes and migration remain.”

GERMANY (ECONOMIST): “On Tuesday a new German Bundestag will convene for its first session after being elected in February. Olaf Scholz will, for now, continue leading a caretaker government; Friedrich Merz is expected to succeed him as chancellor in late April.”

RUSSIA (BBC): “Russia has launched a missile strike targeting north-eastern Ukraine as US and Russian officials met to push for a pause in the war.”

TURKEY (BBC) “Turkey's President Recep Tayyip Erdogan has blamed opposition political parties for provoking a "movement of violence", as protests in the country continue for a sixth night.”

TURKEY (BBG): “Turkey’s Finance Minister Mehmet Simsek will hold a call with international investors on Tuesday, people familiar with the matter said, as authorities seek to calm markets following days of turbulence triggered by the arrest of a key opposition figure.” 

US

TARIFFS (BBG): “President Donald Trump said he will announce tariffs on automobile imports in the coming days — and indicated nations will receive breaks from next week’s “reciprocal” tariffs.” 

GEOPOLITICS (BBG): “US and Russian officials met in Saudi Arabia for about 12 hours a day after American and Ukrainian teams held talks, as President Donald Trump pushes for progress in achieving a ceasefire in the war.

FED (MNI INTERVIEW): MNI INTERVIEW: Tariff Inflation To Sideline Fed-Ex CEA Econ 

OIL (BBG): “ President Donald Trump on Monday issued an order allowing a 25% tariff to be imposed on any nation purchasing oil and gas from Venezuela, ratcheting up his dispute with the Latin American country over immigration with a move that risks roiling the global energy trade.” 

OTHER 

JAPAN (MNI): Bank of Japan board members expressed caution at the January 23-24 meeting, which saw the policy rate increase 25 basis points to 0.50%, with gradual hikes touted as the most preferred path, the published minutes showed Tuesday.

JAPAN (MNI BRIEF): "Bank of Japan Governor Kazuo Ueda said on Tuesday that the stock effect stemming from the BOJ’s significant government bond holdings would contribute to lower long-term interest rates for the time being as the pace of reducing its balance is moderate."   

CANADA (MNI INTERVIEW): Canada Factories Suffer From US Tariff Threats

INDONESIA (BBG): "The Indonesian rupiah declined to its weakest level since the Asian Financial Crisis as fears mounted over the nation’s fiscal trajectory, prompting the central bank to act to defend its currency. " 

CHINA 

CONSUMPTION (MNI): MNI discusses domestic consumption challenges with top China advisors. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.

TECH (BBG): “Alibaba Group Holding Ltd. Chairman Joe Tsai warned of a potential bubble forming in datacenter construction, arguing that the pace of that buildout may outstrip initial demand for AI services.” 

MLF (SECURITIES DAILY): “The People’s Bank of China will issue one-year medium-term lending facility (MLF) loans via a bidding system, a move signalling the MLF’s further downgrading as a policy guide, Securities Daily reported, following a PBOC statement.”  

FISCAL (MOF): “China’s national general public budget revenue reached CNY4.3 trillion during January and February, down 1.6% y/y, while expenditure totalled CNY4.5 trillion, a y/y increase of 3.4%, according to Ministry of Finance data.” 

CHINA MARKETS 

MNI: PBOC Net Injects CNY104.6 Bln via OMO Tuesday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY377.9 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY104.6 billion after offsetting the maturity of CNY273.3 billion today, according to Wind Information. 

• The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.7221% at 09:30 am local time from the close of 1.7690% on Monday.
• The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 48 on Monday, the same as the close on Friday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Higher At 7.1788 Tues; -0.34% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate higher at 7.1788 on Tuesday, compared with 7.1780 set on Monday. The fixing was estimated at 7.2624 by Bloomberg survey today.

MARKET DATA

SOUTH KOREA MARCH CONSUMER CONFIDENCE FALLS TO 93.4; FEB. 95.2

SOUTH KOREA FEB. RETAIL SALES +4.4% Y/Y; JAN. +11.7%
SOUTH KOREA FEB. DEPT. STORE SALES -3.6% Y/Y; JAN. +10.3%
SOUTH KOREA FEB. DISCOUNT STORE SALES -18.8% Y/Y; JAN. +16.1%

MARKETS

US TSYS: Slightly Richer After Yesterday’s Heavy Session

In today's Asia-Pac session, TYM5 is 110-19, +0-01+ from closing levels.

• Cash US tsys are slightly richer, with a steepening bias, in today's Asia-Pac session after yesterday's heavy session.
• Today's US calendar will see Philadelphia Fed Non-Manufacturing, Richmond Fed Mfg, House Prices, New Home Sales and Building Permits data, as well as, Fedspeak from Kugler and Williams.
• Yesterday, concession building ahead of the $183bn in auctions this week added to the selloff, as did the somewhat hawkish comments from the Fed's Bostic.
• Atlanta Fed Pres Bostic (non-2025 FOMC voter) said in a Bloomberg interview that he has reduced his 2025 rate cut expectations to 1 in March's economic projections versus 2 previously, "because I think we will see inflation be very bumpy", and delayed inflation progress warranted pushing back the path to neutral rates.

JGBS: Cheaper, Gov Ueda Discusses BoJ Asset Holdings

JGB futures are weaker and hovering near session lows, -34 compared to settlement levels.

• * (MNI) BoJ board members expressed caution at the January 23-24 meeting, which saw the policy rate increase 25 basis points to 0.50%, with gradual hikes touted as the most preferred path, the published minutes showed Tuesday.
• “BoJ Governor Ueda says the central bank will take into account market conditions and assess appropriate pricing when it creates a plan for how to divest its holdings of ETFs and J-REITs. The decline in the BoJ’s JGB holdings has been extremely gradual, Ueda said when asked about the impact on bond yields stemming from the BoJ’s efforts to reduce such holdings.” (per BBG)
• “Japanese Prime Minister Shigeru Ishiba plans to draw up “powerful” measures to mitigate the impact of inflation.” (per Kyodo via BBG)
• Cash US tsys are slightly richer in today's Asia-Pac session after yesterday's heavy session.
• Cash JGBs are flat to 3bps cheaper across benchmarks, with the belly underperforming. The benchmark 10-year yield is 2.8bps higher at 1.573% and just shy of the cycle high of 1.584%.
• Swap rates are 1-2bps higher, with swap spreads mixed.
• Tomorrow, the local calendar will see PPI Services and Coincident/leading Indices data.

AUSSIE BONDS: Cheaper But At Session Bests Ahead Of Federal Budget

ACGBs (YM flat & XM -2.5) are slightly weaker but Sydney session highs on a data-light session.

• Today we will see the Federal Budget presented around 1930 AEDT. A Federal Election is likely to be called soon after. The Budget is expected to show deficits across the forecast horizon with additional expenditure likely in an attempt to win votes.
• Cash US tsys are slightly richer, with a steepening bias, in today's Asia-Pac session after yesterday's heavy session.
• Cash ACGBs are flat to 2bps cheaper with the AU-US 10-year yield differential at +9bps.
• Swap rates are 1-2bps higher.
• The bills strip is -1 to -2 across contracts.
• RBA-dated OIS pricing is slightly firmer across meetings today. A 25bp rate cut in April is given a 3% probability, with a cumulative 66bps of easing priced by year-end (based on an effective cash rate of 4.09%).
• Tomorrow, the local calendar will see February CPI data.  It is the middle month of the quarter and so will include updates to services components. Headline is forecast to be steady at around 2.5%. The trimmed mean printed at 2.8% in January.
• The AOFM plans to sell A$800mn of the 3.50% 21 December 2034 bond tomorrow and A$700mn of the 1.25% 21 May 2032 bond on Friday.

BONDS: NZGBS: Closed Little Changed After Reversing Early Weakness

NZGBs closed on a strong note, reversing the negative spillover from yesterday’s heavy NY session for US tsys. NZ yields finished flat to 1bp richer after being 4bps cheaper across benchmarks early.  NZ-US 10-year yield differential finished 5bps lower at +21bps.

• The local calendar was empty today and will remain so until Friday’s release of ANZ Consumer Confidence and Filled Jobs data.
• Cash US tsys are slightly richer in today's Asia-Pac session after yesterday's heavy session. Today’s US calendar will see Philadelphia Fed Non-Manufacturing, Richmond Fed Mfg, House Prices, New Home Sales and Building Permits data, as well as, Fedspeak from Kugler and Williams.
• Swap rates closed 1bp lower.
• RBNZ dated OIS pricing closed flat to 3bps firmer across meetings, with late 2025 / early 2026 leading. 24bps of easing is priced for April, with a cumulative 65bps by November 2025.
• On Thursday, the NZ Treasury plans to sell NZ$250mn of the 3.00% Apr-29 bond, NZ$200mn of the 4.25% May-36 bond and NZ$50mn of the 5.00% May-54 bond.

FOREX: USD Index Little Changed, USD/JPY Can't Test Above 151.00

Aggregate moves in G10 FX have been muted so far today. The BBDXY USD index was last down a touch to 1271.4. There has been very limited data out in the Asia Pac region, while the BoJ minutes signaled caution around further rate hikes, but didn't shift yen sentiment. BoJ Governor Ueda was also before parliament, which largely focused on balance sheet issues. 

• USD/JPY was last near 150.55/60, off earlier highs of 150.94. This was close to the 50-day EMA resistance point (151.01). Yen is now slightly firmer for the session. Board members expressed caution at the January 23-24 meeting, which saw the policy rate increase 25 basis points to 0.50%, with gradual hikes touted as the most preferred path, according to the minutes. Governor Ueda stated in parliament that that the stock effect stemming from the BOJ’s significant government bond holdings would contribute to lower long-term interest rates for the time being.
• NZD/USD is down slightly, last near 0.5720, but remains above recent lows. AUD/USD is little changed, last holding close to 0.6285/90. CNH has been a touch weaker, while IDR slumped to fresh lows since the Asian Financial Crisis in 1998. This didn't spill over negatively to AUD though. Likewise in terms of weaker Hong Kong equities, which are down on data center bubble concerns.  
• US equity futures sit down a touch, while US yields are off around 1bps.
• In Australia the FY2026 budget is announced at 1930 AEDT today and is widely expected to show deficits across the forecast horizon and an upward revision to the debt ratio.
• Later the Fed’s Kugler and Williams speak and US January/February housing data, March consumer confidence & Richmond Fed business conditions and March German Ifo survey are released.

ASIA STOCKS: China Stocks Down as Tech Stocks Stumble. 

Alibaba Chairman Joe Tsai has warned that a potential bubble is forming in the construction of data centres around the region to meet the expected demand for AI services. 

China’s DeepSeek released updates to its model with the promise of better programming capabilities and its desire to remain ahead of competitors. 

Hyundai Motors will invest USD$21bn in the US by 2028 with goals of reaching over 1m vehicles per year.  The move is hailed by President Trump as success that tariffs work. 

Whilst China fell, the rest of the region was mostly positive today as markets continue to assess the next phase in the tariff war. 

• China’s Hang Seng is leading the decline down -2.10% today, with the CS! 300 down -0.20%, Shanghai Comp -0.18% and Shenzhen down -0.83%
• The KOSPI followed suit to fall -0.6% marking two successive days of losses, following last week’s strong gains.
• Malaysia’s FTSE KLCI is up +0.70% following the Central Bank’s commitment to the forecast of 4.5%-5.5% GDP growth in 2025.
• Indonesia’s Jakarta Composite has bounced back from yesterday’s significant decline to be up +1.05% following the announcement of former President Jokowi as advisor to the new Sovereign Wealth Fund.
• Singapore’s FTSE Times is having a very strong day, rising +0.86%, Taiwan’s TAIEX is up +0.88% whilst Philippines is down -0.90%.
• India’s NIFTY 50 is having a very strong period as the RBI focuses on liquidity, with the index up +0.60% in this morning’s trade, following from yesterday’s close +1.3% higher. 

OIL: Crude In Narrow Range As Market Struggles With Direction Given Uncertainty

Oil is little changed during today’s APAC session as the market range trades given the highly uncertain outlook but holds onto Monday’s gains. While OPEC and the US plan to increase output, tighter sanctions on Iran and Venezuela could reduce it. Peace in Ukraine looks a long way off and with it an easing in restrictions on Russia. The market is concerned that increased protectionism will weigh on global demand but there is now talk that reciprocal tariffs will be targeted rather than broadly applied. 

• WTI is steady at $69.08/bbl after falling to $69.02, while Brent is around $73.00/bbl following a low of $72.92. The USD index has also been range trading and is down slightly.
• US President Trump signed an order to charge importers of Venezuelan oil and gas a 25% “secondary” tariff from April 2, whether it comes indirectly or directly. This is likely to hit China and India significantly. The order gives Secretary of State Rubio discretion though. It accounts for just under 1% of global output, according to Bloomberg.
• The US itself buys Venezuelan heavy crude used in Gulf Coast refineries. The US’ Chevron has had its licence to produce there extended to give it more time to wind down its operations.
• Last week the market was reassured by another US product stock drawdown even though crude rose again, as it signalled solid demand. Today US industry-based inventory data is released.
• Later the Fed’s Kugler and Williams speak and US January/February housing data, March consumer confidence & Richmond Fed business conditions and March German Ifo survey are released. 

Gold Snaps Three Days of Losses as Prices Jump

• Markets appear to be adjusting on the idea that the next round of tariffs from the Trump administration may not be as harsh as the first.
• It now appears a more targeted approach may be coming with the President suggesting that he may give a lot of countries a ‘break on levies.’
• If gold's price action as a safe haven investment is anything to go by, the risk of tariffs and the ensuing trade war has seen a 15% gain year to date.
• Gold opened at US$3,011.04 and despite a lackluster start to the day, bounced in afternoon trade to reach $3016.00
• Gold remains trading above all major technical moving averages with the closest being the 20-day EMA at 2,969.25.
• All key moving averages remain upward sloping, a sign that the bullish sentiment still has some momentum.

UP TODAY (TIMES GMT/LOCAL) 

Date	GMT/Local	Impact	Country	Event
25/03/2025	0700/0800	**	SE	PPI
25/03/2025	0800/0900	**	ES	PPI
25/03/2025	0900/1000	***	DE	IFO Business Climate Index
25/03/2025	1000/1000	**	GB	Gilt Outright Auction Result
25/03/2025	1100/1100	**	GB	CBI Distributive Trades
25/03/2025	1230/0830	**	US	Philadelphia Fed Nonmanufacturing Index
25/03/2025	1240/0840		US	Fed Governor Adriana Kugler
25/03/2025	1255/0855	**	US	Redbook Retail Sales Index
25/03/2025	1300/0900	**	US	S&P Case-Shiller Home Price Index
25/03/2025	1300/0900	**	US	FHFA Home Price Index
25/03/2025	1300/0900	**	US	FHFA Home Price Index
25/03/2025	1305/0905		US	New York Fed's John Williams
25/03/2025	1400/1500	**	BE	BNB Business Confidence
25/03/2025	1400/1000	***	US	New Home Sales
25/03/2025	1400/1000	***	US	Conference Board Consumer Confidence
25/03/2025	1400/1000	**	US	Richmond Fed Survey
25/03/2025	1700/1300	*	US	US Treasury Auction Result for 2 Year Note
26/03/2025	0030/1130	***	AU	CPI Inflation Monthly
26/03/2025	0700/0700	***	GB	Consumer inflation report
26/03/2025	0700/1500	**	CN	MNI China Money Market Index (MMI)
26/03/2025	0745/0845	**	FR	Consumer Sentiment
26/03/2025	0800/0900	**	SE	Economic Tendency Indicator
26/03/2025	0800/0900	***	ES	GDP (f)
26/03/2025	1000/1000	**	GB	Gilt Outright Auction Result
26/03/2025	1100/0700	**	US	MBA Weekly Applications Index
26/03/2025	-		GB	OBR Spring Forecasts
26/03/2025	1230/0830	**	US	Durable Goods New Orders
26/03/2025	1230/1230		GB	Chancellor Reeves to deliver Spring Statement
26/03/2025	1330/1330		GB	DMO to announce FY25/26 financing remit (approx time)