MNI EUROPEAN OPEN: USD/JPY Firms Amid Higher US Yields
EXECUTIVE SUMMARY
- TRUMP SAYS HE DOESN’T WANT ‘TOO MANY’ EXCEPTIONS IN TARIFF PUSH - BBG
- FED'S GOOLSBEE SAYS CENTRAL BANK NO LONGER ON 'GOLDEN PATH': FT/BBG
- DRAGHI CALLS GERMANY’S SHIFT ON DEFENSE SPENDING’GAME CHANGER’ - BBG
- BOJ UEDA SEES 3% WAGE HIKES VITAL FOR 2% TARGET - MNI BRIEF
- BOJ’S UEDA SEE UPSIDE, DOWNSIDE RISKS TO PRICES - MNI BRIEF
- AUSSIE TRIMMED MEAN AT 2.7% Y/Y OVER FEB - MNI BRIEF
Fig 1: Australia - Monthly Data Suggest Services Inflation Eased In Q1
Source: MNI - Market News/Bloomberg/Refinitiv.
UK
FISCAL (POLITICO): “Rachel Reeves bangs the “growth, growth, growth” drum again Wednesday. But forecasts released alongside the chancellor’s spring statement Wednesday are set to halve projected U.K. GDP growth in 2025 to around 1 percent.”
FISCAL (BBC): “Chancellor Rachel Reeves is set to make further cuts to welfare benefits and government departments in her Spring Statement on Wednesday. The government announced big welfare spending reductions last week but the chancellor is set to expand the cuts after being told reforms to the system would save less than planned.”
BOE (MNI INTERVIEW): Seasonally-Adjusted Inflation Data To Help BOE
EU
ECB (MNI BRIEF): The ECB still has scope to further ease interest rates as tariffs should not have a significant inflationary impact on the euro area, Bank of France Governor Francois Villeroy said on Tuesday.
DEFENCE (BBG): “Former European Central Bank President Mario Draghi said Germany’s decision to ramp up defense spending is a “game changer” but warned there are risks when it comes to how it’s implemented.”
RUSSIA (BBG): “President Donald Trump said it was possible that Vladimir Putin was avoiding finalizing a ceasefire agreement, but that he remained confident the Russian leader intended to strike a deal.”
RUSSIA/UKRAINE (BBC): “Russia and Ukraine have agreed to a naval ceasefire in the Black Sea in separate deals with the US, after three days of peace talks in Saudi Arabia. Washington said all parties would continue working toward a "durable and lasting peace". They have also committed to "develop measures" to implement a previously agreed ban on attacking each other's energy infrastructure, the White House said. But Russia said the naval ceasefire would only come into force after a number of sanctions against its food and fertiliser trade were lifted.”
UKRAINE (POLITICO): “U.S. intelligence agencies sounded the alarm on Ukraine’s dwindling battlefield prospects against Russia in an annual report released Tuesday.”
TURKEY (DW): “Turkish protesters took to the streets for a sixth straight day on Tuesday, as 7 journalists were detained, swept up in a large crackdown against dissent.”
US
TARIFFS (BBG): “ President Donald Trump said he plans to limit exceptions to his tariff push, the latest cryptic hint about a planned April 2 announcement of reciprocal duties on global trading partners.”
COPPER (BBG): “US tariffs on copper imports could be coming within several weeks, months earlier than the deadline for a decision, according to people familiar with the matter. Copper traded in New York rose to a record.”
FISCAL (BBG): "Republican leaders say they are getting close to agreeing on a plan to pass an extension of President Donald Trump’s 2017 tax cuts and an increase to the debt ceiling, as Congress looks to approve an economic package by the end of May."
FED (FT/BBG): "The Fed is no longer on the “golden path,” witnessed in 2023 and 2024, Austan Goolsbee, president of the Chicago Fed, told the Financial Times in an interview."
OTHER
JAPAN (MNI BRIEF): Bank of Japan Governor Kazuo Ueda said on Wednesday that there is both upside and downside risks to prices as uncertainties due to the global economy and inflation driven by U.S. trade policies.
JAPAN (MNI BRIEF): The Bank of Japan is focused on whether the economy will achieve wage hikes of around 3% and spread broadly, Governor Kazuo Ueda told lawmakers Wednesday.
JAPAN (MNI BRIEF): Bank of Japan Governor Kazuo Ueda said on Wednesday that the real short-term interest rate is below -2.0%, slightly lower than the latest BOJ estimate, and the bank will raise the policy rate to adjust the degree of accommodative financial conditions.
JAPAN (MNI BRIEF): Japan’s services producer price index rose 3.0% y/y in February, decelerating from January’s revised 3.2%, but remained consistent with solid corporate pass-through of cost increases, preliminary data released by the Bank of Japan on Wednesday showed.
AUSTRALIA (MNI BRIEF): Monthly annual trimmed mean inflation fell 10 basis points to 2.7% y/y in February, while the headline CPI indicator printed at 2.4%, data from the Australian Bureau of Statistics showed Wednesday.
CHINA
PROPERTY (YICAI): “Out of China’s 31 provinces, eight saw positive growth in real-estate investment in the first two months, double from 2024, Yicai.com reported, noting more than 50% saw declines narrowing”
FISCAL (SECURITIES DAILY): “China’s rapid issuance of new special bonds demonstrates local governments' intention to stimulate market vitality actively, according to Zhang Yiqun, director at the Jilin Provincial Institute of Fiscal Science.”
FISCAL (XINHUA NEWS AGENCY): “China’s general budget expenditure reached CNY4.5 trillion during January and February, accounting for 15.2% of the annual spending plan, representing the highest average level for the same period in three years, highlighting the government’s commitment to frontloading fiscal policy in 2025, according to experts interviewed by Xinhua News Agency.”
CHINA MARKETS
MNI: PBOC Net Injects CNY159.5 Bln via OMO Wednesday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY455.4 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net injection of CNY159.5 billion after offsetting the maturity of CNY295.9 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.8292% at 10:00 am local time from the close of 1.9062% on Tuesday.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 46 on Tuesday, compared with the close of 48 on Monday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1754 Weds; -0.5% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1754 on Wednesday, compared with 7.1788 set on Tuesday. The fixing was estimated at 7.2581 by Bloomberg survey today.
MARKET DATA
AUSTRALIA FEB. CONSUMER PRICES +2.4% Y/Y; EST. 2.5%; JAN. 2.5%
AUSTRALIA FEB. TRIMMED MEAN CPI +2.7% Y/Y; JAN. 2.8%
JAPAN FEB. SERVICES PRODUCER PRICES +3.0% Y/Y; EST. +3.1%; JAN. +3.2%
SOUTH KOREA BUSINESS SURVEY MFG MAR. 91.9; FEB. 90.1
SOUTH KOREA BUSINESS SURVEY NON-MFG MAR. 82.9; FEB. 81.7
MARKETS
US TSYS: Yesterday’s Modest Gains Reversed In Today’s Asia-Pac Session
In today's Asia-Pac session, TYM5 is 110-19, -0-05 from closing levels.
- Cash US tsys are ~2bps cheaper in today's Asia-Pac session after yesterday's modest gains.
- Us tsys ended in the green, recovering from early weakness, with fears over a slump in the economy underpinning a small haven bid. Bottom fishers also provided support.
- Wednesday's focus is on Durables/Cap Goods, Tsy 5Y Sale and Fed Speak: MN Fed Kashkari Fed listens event (no text, Q&A) at 1000ET, StL Fed Musalem on economy/policy (text, Q&A) at 1310ET.
JGBS: Fresh Cycle High For 10YY, 40Y Supply Tomorrow
JGB futures are weaker and at session lows, -17 compared to settlement levels.
- Japan’s leading economic indicator was revised to 108.3 in January, from 108.0 in the preliminary release.
- (MNI) BoJ Ueda told lawmakers that the BOJ is always paying attention to the risk that the pace of underlying CPI inflation will accelerate above forecasts, noting the Bank had weakened the degree of easy policy since March 2024 when it scrapped the negative interest rate policy.
- "The Bank of Japan may consider monetary tightening if a surge in food prices causes broader and stronger inflation, the central bank governor said Wednesday, adding fuel to expectations for a near-term rate hike." (per DJ via BBG)
- Cash US tsys are ~2bps cheaper in today's Asia-Pac session after yesterday's modest gains. Wednesday's focus is on Durables/Cap Goods, Tsy 5Y Sale and Fed Speak from MN Fed Kashkari Fed and StL Fed Musalem.
- Cash JGBs are flat to 1bp cheaper across benchmarks. The benchmark 10-year yield is 0.9bps higher at 1.593%, a fresh cycle high.
- Swap rates are flat to 2bps higher, with a flattening bias.
- Tomorrow, the local calendar will see weekly International Investment Flow data alongside 40-year supply.
AUSSIE BONDS: Cheaper Despite CPI Beat
ACGBs (YM -4.0 & XM -4.0) are weaker and sit in the middle of today’s of today’s ranges.
- February headline CPI rose 0.1% m/m to be up 2.4% y/y down from January’s 2.5%.
- Given it continues to be impacted by various state and federal electricity rebates, the focus is on the underlying trimmed mean which moderated 0.1pp to 2.7% y/y and has been under 3% now for three straight months.
- Q1 data is released on April 30 and the RBA is forecasting core at 2.7%, in line with the monthly data and below the target band’s ceiling, which will be the first time since Q4 2021. The outcome will be a key input into the May 20 RBA decision.
- Cash US tsys are ~2bps cheaper in today's Asia-Pac session after yesterday's modest gains
- Cash ACGBs are 3-4bps cheaper with the AU-US 10-year yield differential at +13bps.
- Swap rates are 3bps higher.
- The bills strip contracts are -2 to -5, with a steepening bias.
- RBA-dated OIS pricing is flat to 5bps firmer across meetings today. A 25bp rate cut in April is given a 4% probability, with a cumulative 64bps of easing priced by year-end.
- The local calendar will be empty for the remainder of the week.
BONDS: NZGBS: Closed At Session Bests But Only Slightly Richer
NZGBs closed on a strong note, with benchmarks flat to 1bp richer after being 2bps cheaper early.
- The NZGB 10-year outperformed its $-bloc counterparts, with the NZ-US and NZ-AU yield differentials respectively 1bp and 3bps tighter. Nevertheless, at +21bps, the NZ-US 10-year differential hovers just below the widest level for the year and back at November 2024 levels.
- Cash US tsys are ~2bps cheaper in today's Asia-Pac session after yesterday's modest gains.
- Swap rates closed flat to 1bp lower.
- RBNZ dated OIS pricing closed flat to 3bps softer across meetings, with February 2026 leading the move. 24bps of easing is priced for April, with a cumulative 67ps by November 2025.
- The local calendar was empty today and will remain so until Friday's ANZ Consumer Confidence and Filled Jobs data release.
- Tomorrow, 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.
- The NZ Treasury also plans to offer NZ$2bn of bonds in April, NZ$500mn each week. By April 30, a syndicated tap of the existing May 2032 nominal bond will be undertaken.
FOREX: Yen Underperforms Amid US Yield Rise, Ueda In Parliament
The USD BBDXY index sits higher, last around 1271.5, up +0.10%. This is mostly reflective of a weaker yen backdrop, which has unwound some of Tuesday's outperformance.
- USD/JPY was last near 150.45/50, off around 0.40% in yen terms. Tuesday highs at 150.94 remain intact, while the 50-day EMA is nearby to this high as well. Earlier we had the PPI services for Feb, which were slightly below market estimates, but still suggest an elevated inflation backdrop.
- BoJ Governor Ueda has also been before parliament today, giving wide ranging remarks. On policy, with real rates still negative there is more room for the BOJ to adjust policy, if the economic evolves as expected. Still uncertainty is more elevated compared to when the central bank tightened in Jan, Ueda noted.
- Market pricing for the next BoJ hike is around 25bps by the Sep policy meeting.
- In the cross asset space, US yields are up around 2bps across the Tsy benchmarks, which has likely aided USD sentiment, particularly against the yen.
- AUD/USD dipped under 0.6300 but was supported, last near 0.6305/10, up slightly for the session. The Feb monthly CPI was just under market estimates, but didn't shift sentiment much in the FX space.
- Regional equities are mostly higher, albeit with Indonesia the standout. This has added a risk on feel to markets, but US futures are close to flat.
- NZD/USD has risen back towards 0.5750, outperforming the AUD at the margins. AUD/NZD hasn't been able to sustain +1.1000 levels and is now back at 1.0980 (the weaker Feb CPI a likely factor). NZD/JPY is back above its 50-day EMA, last close to 86.50.
- Later the Fed’s Kashkari and Musalem appear and preliminary US February durable goods data print. The ECB’s Cipollone participates in a panel and UK February CPI and the government spring budget statement are released.
ASIA STOCKS: Regional Stocks Deliver Positive Gains Today
Alibaba Group Holding Ltd. and BMW AG will team up to produce AI for cars in China, as the tech giant looks to monetize its emerging products and reach more customers.
China’s No. 1 smartphone maker Vivo wants to increase sales from overseas markets like Southeast Asia to as much as 70% of revenue in two years, accelerating its global push as the world’s biggest handset market saturates.
Indonesia’s Bank Mandiri’s price was up over 8% after a larger than expected dividend was approved.
LG Energy Solution signed a strategic partnership with Delta Electronics to expand into the US residential energy storage system (ESS) market, according to a company statement.
China Merchants Bank shares fall as much as 6.6% after reporting FY net income that met the average analyst estimate. Bloomberg Intelligence analyst warned of its jump in non-performing loans and expected weak outlook due to narrowing margins.
- China’s Hang Seng led the way today rising +0.25% after yesterday’s dramatic fall. The CSI 300 didn’t follow suit and oscillated around where it started for the trading day whilst the Shanghai Composite rose +0.20% and Shenzhen was the outperformer up +0.70%.
- The KOSPI bounced back to deliver a positive day today, rising +1.20% and erasing the last two days of losses.
- Having delivered a positive day yesterday despite regional falls, the FTSE KLCI is up again today by +0.80%.
- The eyes of the region remain on Indonesia with the Jakarta Composite rising +3.35% following positive banking sector news.
- Singapore continues it’s good run rising +0.31% today in what has been a good period for the Straits Times Index, whilst the Philippines bucked the regional positivity today falling -0.26%
- India’s NIFTY 50 is opening marginally down this morning but has been on a very good run of gains in recent days.
OIL: US Stock Drawdown Supports Crude In Uncertain World, EIA Data Out Later
Oil prices are moderately higher following data showing a large crude stock drawdown in the US last week. Markets tentatively sold off on news of a partial Ukraine-Russia ceasefire deal but the trend hasn’t continued today as Russia has conditions and US President Trump said that the Russians may be “dragging their feet” on settling an agreement. Positive risk sentiment has also supported crude today.
- WTI is up 0.3% to $69.18 after a high of $69.45 earlier. The benchmark is struggling to hold breaks above the 50-day EMA at $69.33. Brent is off its intraday peak of $73.37, but is hovering around initial resistance at $73.17 to be 0.2% higher at $73.18. The USD index is 0.1% higher.
- Oil price moves have been muted and the market is likely waiting for what US tariffs are actually imposed on April 2. It has been concerned that increased trade protectionism will reduce global demand. Trump has said that he’s likely to be more lenient than reciprocal but doesn‘t want too many exceptions. Thus uncertainty remains heightened.
- Bloomberg reported that there was a US crude inventory drawdown of 4.6mn barrels last week, according to people familiar with the API data. Products continued to decline with gasoline down 3.3mn and distillate 1.3mn. The official EIA data is out today.
- Later the Fed’s Kashkari and Musalem appear and preliminary US February durable goods data print. The ECB’s Cipollone participates in a panel and UK February CPI and the government spring budget statement are released.
GOLD: Early Gains Given Back as Gold Retreats.
- Following the first three successive down days of the year, gold resumed its rally overnight gaining +0.30% yet couldn’t hold onto those gains in the Asian trading session .
- Whilst a short-term spike towards the middle of the Asian trading day saw gold touch US$3,027.12.00, gold fell below it’s opening level of $3,020.08 to $3,016.10
- Overnight weaker than expected US consumer confidence was a contributor to risk sentiment, which carried over into the Asian trading session. .
- The bid by South African miner Gold Fields for Australian miner Gold Road Resources has been rejected.
- All key moving averages remain upward sloping, indicating that the bullish momentum remains in place for gold as it remains above the 20-day EMA of $2,974.50
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 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) | |
| 26/03/2025 | 1400/1000 | US | Minneapolis Fed's Neel Kashkari | |
| 26/03/2025 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 26/03/2025 | 1530/1530 | GB | DMO agenda for quarterly consultation | |
| 26/03/2025 | 1530/1130 | ** | US | US Treasury Auction Result for 2 Year Floating Rate Note |
| 26/03/2025 | 1700/1300 | * | US | US Treasury Auction Result for 5 Year Note |
| 26/03/2025 | 1710/1310 | US | St. Louis Fed's Alberto Musalem | |
| 26/03/2025 | 1730/1330 |  CA | BOC Meeting Minutes | |
| 26/03/2025 | 1800/1900 |  EU | ECB's Cipollone in panel on Digital Finance | |
| 27/03/2025 | - |  NO | NorgesBank Meeting | |
| 27/03/2025 | 0830/0830 | GB | BOE's Dhingra on inflation targeting in the UK post pandemic period | |
| 27/03/2025 | 0900/1000 | *** | NO | Norges Bank Rate Decision |
| 27/03/2025 | 0900/1000 | ** | EU | M3 |
| 27/03/2025 | 1000/1000 | ** | GB | Gilt Outright Auction Result |
| 27/03/2025 | - | FR | Insee publishes General Govt balance | |
| 27/03/2025 | 1230/0830 | * | CA | Payroll employment |
| 27/03/2025 | 1230/0830 | *** | US | Jobless Claims |
| 27/03/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 27/03/2025 | 1230/0830 | *** | US | GDP |
| 27/03/2025 | 1230/0830 | ** | US | Advance Trade, Advance Business Inventories |
| 27/03/2025 | 1300/1400 | EU | ECB's De Guindos at 2025 IIF European Summit |
