Asia Summary and Highlights 29 Apr
USD/JPY jumped two big figures after opening lower
Buyers taking advantage of Japanese holiday and lack of signal for intervention
And faced the intervention train immediately
Asia Session
USD/JPY buyers seems to be taking advantage of the Japanese holiday and has pushed the pair two figures higher to a session high of 160.24. There is no headlines nor economic release that triggered the move. Market participants seems to read Friday's BoJ meeting lack of commitment in defending the JPY as a green light to go straight ahead. While the soft rhetoric from BoJ and Japanese officials likely pointed towards little will in intervention, in our article we have forecasted if USD/JPY rises by 1% a day continuously, it will attracts more attention towards intervention. It proves that the rally is too rapid in MoF and BoJ's eyes as we are seeing an intervention style meltdown in USD/JPY. In the past, most intervention ended by driving the pair down by roughly five big figures from peak to trough and will likely only be able to stall the previous underlying momentum until a fundamental shift. But who knows when someone gets called to work on a holiday, maybe they will be more forceful than usual as unpredictability is also a key element in the toolbox of intervention. USD/JPY slumped from session high at 160.20 to 155.28, down 1.88% for the session so far, one can expect more volatility in coming the session.
Over the weekend, China has removed home-buying restrictions for Chengdu. Chinese property sector cheered another supportive measures and should further relieve some pressure. Regional sentiment got a shot in the arm with both the Chinese and Hong Kong equity indexes in the green and up around a percent while U.S. 3 major equity indexes under performed but still have some earnest gains. AUD/USD is supported and trades 0.77% higher at 0.6569, NZD/USD is 0.67% higher at 0.5978 while USD/CAD slips 0.24% to 1.3634 as the USD is dragged lower. Else, EUR/USD up 0.36% and GBP/USD up 0.42%.
North American session
While March US core PCE price index provided modest relief in rising by an as expected 0.3%, the USD traded higher in North America. USD/JPY led the way, rising by around a big figure to near 157.80 with no significant correction from its high. Elsewhere the USD moved off its highs to record only modest gains, EUR/USD setting in mid-range near 1.07 after bottoming at 1.0674. Other pairs showed similar moves, GBP/USD slightly outperforming EUR/USD as EUR/GBP slipped to .8560.
US March personal income rose by an as expected 0.5% while spending exceeded consensus with a 0.8% increase, though we had already seen Q1 totals in the GDP breakdown. April’s final Michigan CI saw only a marginal revision, down to 77.2 from 77.9.