ASIA FX: USD/Asia Pairs Mixed, PHP Outperforms
Apr-25 05:15
USD/Asia pairs are mixed to end the week. Focus remains on tariff/trade developments. Earlier BBG headlines that China was considering exempting some of the goods it imports from the US (due to rising costs) has aided what was already a positive risk mood. Regional equities, outside of India, are all in the green today.
- USD/CNH is lower, last near 7.2840, with some positive CNH momentum since the tariff headlines crossed earlier. The pair remains within recent ranges though, with recent lows at 7.2765. Downside focus may rest at the 200-day EMA (close to 7.2530). CNH is clearly outperforming safe havens like JPY and CHF as equity sentiment continues to improve. CNH/JPY was last back close to 19.72, up a further 0.80% today.
- Spot USD/KRW is little changed, the pair last near 1433/34, down from Thursday highs above 1440. The won hasn't seen much benefit against the USD from the turnaround in equity market sentiment, but like CNH is benefiting on crosses. JPY/KRW is back under 10.00.
- USD/INR continues see support ahead of the 85.00 level, we were last 85.35/40, slightly weaker in INR terms for the session. Indian equities are struggling in the first part of Friday trade, down around 1% for the Nifty. The +12% rally from early April lows may be driving some near term caution in sentiment. Offshore investors have been strong buyers of local equities so far this week.
- USD/IDR is down modestly but at 16820 remains within recent ranges.
- PHP is outperforming, USD/PHP was last near 56.30/35, 0.40% firmer in PHP terms. This puts the pair at fresh lows back to Oct of last year. A chunky +$5bn local bond sale may be helping the FX, while local equities are also up strongly, last +1.85%. For USD/PHP the next downside target is likely to be the 56.00 figure level.
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JGBS: Fresh Cycle High For 10YY, 40Y Supply Tomorrow
Mar-26 05:14
JGB futures are weaker and at session lows, -17 compared to settlement levels.
- Japan’s leading economic indicator was revised to 108.3 in January, from 108.0 in the preliminary release.
- (MNI) BoJ Ueda told lawmakers that the BOJ is always paying attention to the risk that the pace of underlying CPI inflation will accelerate above forecasts, noting the Bank had weakened the degree of easy policy since March 2024 when it scrapped the negative interest rate policy.
- "The Bank of Japan may consider monetary tightening if a surge in food prices causes broader and stronger inflation, the central bank governor said Wednesday, adding fuel to expectations for a near-term rate hike." (per DJ via BBG)
- Cash US tsys are ~2bps cheaper in today's Asia-Pac session after yesterday's modest gains. Wednesday's focus is on Durables/Cap Goods, Tsy 5Y Sale and Fed Speak from MN Fed Kashkari Fed and StL Fed Musalem.
- Cash JGBs are flat to 1bp cheaper across benchmarks. The benchmark 10-year yield is 0.9bps higher at 1.593%, a fresh cycle high.
- Swap rates are flat to 2bps higher, with a flattening bias.
- Tomorrow, the local calendar will see weekly International Investment Flow data alongside 40-year supply.
NZD: NZD/JPY Testing Through 50-day EMA Resistance**
Mar-26 04:57
** correction to headline from earlier bullet, NZD/JPY was testing through the 50-day EMA, not the 100-day
NZD/USD is outperforming in the G10 space, up around 0.25% in latest dealings. We track close to 0.5745/50, which is just under intra-session highs from Tuesday. The 100-day EMA is above 0.5760, a potential upside resistance watch point.
- The A$ is the next best performer, but up a more modest 0.10%. Yen is underperforming, down around to 0.30%, with USD/JPY last near 150.35/40.
- NZD/JPY is near 86.40, which puts it above the 50-day EMA, albeit just. The 100-day EMA is around 87.40, which wasn't breached in the earlier March risk on period.
- The fact yen is underperforming points to this being a risk on move, although US equity futures sit close to flat. Concerns around China Nvidia demand in light on new energy regulations (per the FT) has weighed on Nasdaq futures.
- BoJ Governor Ueda comments are also in focus. He is before the parliament today and largely has reiterated recent BoJ rhetoric, with high uncertainty remaining around the economic outlook.
Regional equities are higher, but gains are mostly less than 1% at this stage (ex Indonesia).
FOREX: Yen Underperforms Amid US Yield Rise, Ueda In Parliament
Mar-26 04:56
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.
