FOREX: Moderate FX Moves During APAC Session, Yen Underperforming
The BBDXY USD index fell 0.1% earlier but has rebounded off that low to be 0.1% higher during APAC today supported by higher Treasury yields. There also has been little new information during the session. The yen is underperforming in light of stronger risk appetite with USDJPY 0.3% higher at 149.28 after a high of 149.33. EURJPY continues to climb with the pair up 0.3% to 161.12 off today’s high of 161.28.
- EURUSD is little changed currently at 1.0791 off its intraday peak of 1.082 with it unable to hold the break above 1.0800. With the Swiss franc also pressured by the improvement in risk sentiment, EURCHF is 0.1% higher at 0.9625.
- GBPUSD is down slightly to 1.2890 leaving EURGBP slightly higher at 0.8372 but off the intraday high of 0.8383.
- AUDUSD reached 0.6357 when the greenback was weakening but has moderated since to be up around 0.1% to 0.6340. NZDUSD is 0.1% higher at 0.5733 leaving AUDNZD moderately lower at 1.1059. The pair has range traded through the session.
- AUDEUR has been declining on increased trade protectionism but today is up slightly to 0.5875, close to the intraday high.
- Equities are mixed with the Hang Seng up 2.6%, CSI 300 +1.3% and Nikkei +0.9% but ASX down 0.5% and Nifty 50 -0.1% and the S&P e-mini is flat. Oil prices are moderately higher with WTI +0.6% to $66.70/bbl. Copper is 0.3% higher and iron ore $101-102/t.
- Later the Fed’s Waller and Harker speak and US jobless claims and final Q4 productivity/ULC print. The ECB is expected to cut rates 25bp with President Lagarde appearing afterwards and euro area January retail sales are released. Canada’s February Ivey PMI is also out.
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ASIA STOCKS: Asian Equities Surge On Tariff Pause
Asian equities rebounded sharply as US President Donald Trump delayed tariffs on Mexico and Canada, fueling hopes of a potential reprieve for China. Hong Kong stocks surged, with the Hang Seng China Enterprises Index jumping nearly 4% before paring gains, its biggest move since October, as markets anticipated trade talks between Trump and Xi. Japan’s Nikkei 225 rose 1.6%, led by auto and electronics stocks, while South Korea’s Kospi climbed 1.6%. Australia’s ASX 200 edged up 0.13%, supported by gains in tech and mining stocks, with gold miners benefiting from record-high gold prices.
AUSSIE BONDS: Cheaper With US Tsys, New Mar-36 Bond To Be Priced Tomorrow
ACGBs (YM -4.0 & XM -5.5) are cheaper after dealing in relatively narrow ranges on a second-tier data day.
- Outside of the previously outlined household spending and ANZ-Roy Morgan Consumer Confidence, there hasn't been much by way of domestic drivers to flag.
- Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s modest sell-off following news that President Trump agreed to delay a 25% tariff on Mexico and Canada.
- Cash ACGBs are 5bps cheaper with the AU-US 10-year yield differential at -14bps.
- Swap rates are 4-5bps higher.
- The bills strip has bear-steepened with pricing -1 to -6.
- RBA-dated OIS pricing is flat to 4bps firmer across meetings today. A 25bp rate cut is more than fully priced for April (136%), with the probability of a February cut at 91% (based on an effective cash rate of 4.34%).
- Tomorrow, the local calendar will see S&P Global Composite & Services PMIs.
- The AOFM announced the issue by syndication of a new 4.25% 21 March 2036 Treasury Bond. The issue will be of a benchmark size. Initial price guidance is a spread of 2 to 5bps to XMH5. The issue is expected to be priced tomorrow.
FOREX: USD Index Near Session Highs As China Tariff Deadline Approaches
The USD BBDXY index is back close to session highs as the China tariff deadline approaches (around 40mins away), last near 1308. USD/CNH is little changed, last around 7.3100, sub earlier highs above 7.3200. Overnight USD/CNH implied vol is around 8%, off earlier highs near 10.9%.
Higher beta FX is underperforming marginally in the G10 space. AUD/USD was last near 0.6200 just up from session lows (down a little over 0.40%), while NZD/USD is back around 0.5600/05, down close to 0.50%. EUR and JPY are both off close to 0.30%. EUR/USD at 1.0310/15 is near worst levels for the session, while USD/JPY (at 155.20/25) is just under session highs (155.41).
