ASIA FX: USD/KRW Dips Eyeing Recent Lows, CNH & TWD Respecting Recent Ranges

Q1 NZ CPI data print on Thursday and are expected to show a pickup in inflation from Q4 but still comfortably within the RBNZ’s 1-3% band. Bloomberg consensus is at 0.8% q/q & 2.4% y/y, in line with the RBNZ’s February forecast but higher than Q4’s 0.5% q/q & 2.2% y/y. Both tradeables and non-tradeables are projected to post a stronger quarterly increase than in Q4.

• There is quite a range of forecasts amongst the 14 respondents in Bloomberg. Headline inflation ranges from 0.3% to 0.9% q/q and thus 1.9% to 2.5% y/y.
• The domestic banks are all close to consensus with Kiwibank and Westpac in line and ANZ, ASB and BNZ slightly higher at 0.9% q/q & 2.5% y/y.
• There are only 8 forecasts in Bloomberg for tradeables and non-tradeables but consensus is at 0.8% q/q. The RBNZ forecast 0.7% q/q and 0.9% q/q respectively.
• Tradeables projections on Bloomberg range from 0.4% to 1.0% q/q with Westpac forecasting 0.6%, Kiwibank 0.7%, ANZ 0.8% and BNZ 1.0%. Monthly price data showed that fuel and food prices rose in Q1.
• Non-tradeables are between 0.6% and 0.9% q/q with BNZ & Kiwibank at 0.8% and ANZ & Westpac 0.9%. This component is monitored closely as it is domestically driven and the annual rate should print at its lowest in around 4 years.
• The RBNZ will release its measure of underlying inflation from its sectoral factor model. It eased 0.2pp to 3.1% in Q4, still above the top of the band, but may drop inside it in Q1. 

TYM5 traded in a narrow 110-30+ to 111-04 range during the Asia-Pacific session, heading into the London open. It last changed hands at 111-01, down 0.01 from the previous close.

• The US 10-year yield has consolidated in a tight range of 4.3117 - 4.3369% in Asia, dealing around 4.33% as we head into the London open.
• US yields continued to benefit from comments made overnight by Deputy Treasury Secretary Michael Faulkner who said officials are discussing a move to loosen bank regulations and allow lenders to keep more Treasuries on their balance sheets.
• The market is keenly awaiting Fed Chair Jerome Powell’s speech later today discussing the economic outlook.
• Dips back towards 4.25/30% should now find supply, as the market consolidates heading into a long weekend.
• Today's Data: Retail Sales, Industrial Production, Capacity Utilization, NAHB Housing Market Index.

At the Tokyo lunch break, JGB futures are stronger, +44 compared to settlement levels, hovering just below session highs. 

• Cash US tsys are 1bp cheaper to 3bps richer, with a steepening bias, in today's Asia-Pac session after yesterday's modest gains.
• BoJ Governor Ueda has commented to local newspaper Sankei, noting the central bank will have to monitor the tariff impact and may need to respond if the economy is impacted. (per RTRS)
• The next BoJ policy meeting is at the start of May. Market expectations for rate hikes have been sharply scaled back over the past month in response to President Trump's announcement of reciprocal tariffs. Markets now assign a 0% probability to a 25bp hike at the May meeting, with less than a cumulative 50% chance not priced in by December.
• This marks a significant shift from just a month ago when a full hike was priced by October and a 50% probability was expected by June.
• Cash JGBs are 2-7bps richer across benchmarks, with a flattening bias. The benchmark 10-year yield is 3.9bps lower at 1.332% versus the cycle high of 1.596%.
• Swaps have also bull-flattened, with rates 2-8bps lower. Swap spreads are mixed.