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ASIA FX: A$ Down As Feb Nearly 100% Priced For A Cut, USD Softer Elsewhere

ASIA FX
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The USD has lost some ground as Wednesday Asia Pac trade unfolds. The BBDXY index was last back under 1300, off a little over 0.10%. Aggregate G10 moves have remained fairly well contained so far. A lot of Asia markets are closed today, including China/HK and Singapore, which has curtailed liquidity, whilst the FOMC is due later in the Wednesday US session. 

  • The A$ has seen the largest swings, thanks to the Q4 CPI miss (for both headline and trimmed mean). AUD/USD got to lows of 0.6227, but sits slightly higher in latest dealings near 0.6240 (off around 0.25%). Market pricing for the Feb RBA meeting is close to 95% priced (Westpac joined two other local banks in forecasting a rate move in Feb). April is more than 100% priced. AU-US yield differentials are lower, but haven't seen a sharp move so far today.
  • NZD/USD fell in sympathy with AUD, but also sits up from session lows, last near 0.5660/65. Earlier the RBNZ's Conway stated that further easing from the central bank is likely (as they signalled late last year).
  • The AUD/NZD cross is back in the 1.1015/20 region, post CPI lows were at 1.1007, levels last seen in Dec 2024.
  • Regional equity markets, which are open, are higher, while US futures are also a touch firmer, but have been largely range bound. US yields sit slightly lower, with losses around 1bps or slightly more.
  • USD/JPY is a touch lower, last near 155.30 but remains within recent ranges. Monday highs were just short of 156.00 and today we got to 155.79 in earlier dealings. The BoJ Dec Mins were released earlier, with "Many members pointed out that economic activity and prices had been developing in line with the Bank's outlook at the meeting." This obviously came before the central bank raised rates at the Jan policy meeting.
  • Looking ahead, we have the Fed decision as the main focus point. No change is expected but the tone will be watched in terms of the outlook. Before the Fed, the BoC is expected to cut rates by 25bps. 
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The USD has lost some ground as Wednesday Asia Pac trade unfolds. The BBDXY index was last back under 1300, off a little over 0.10%. Aggregate G10 moves have remained fairly well contained so far. A lot of Asia markets are closed today, including China/HK and Singapore, which has curtailed liquidity, whilst the FOMC is due later in the Wednesday US session. 

  • The A$ has seen the largest swings, thanks to the Q4 CPI miss (for both headline and trimmed mean). AUD/USD got to lows of 0.6227, but sits slightly higher in latest dealings near 0.6240 (off around 0.25%). Market pricing for the Feb RBA meeting is close to 95% priced (Westpac joined two other local banks in forecasting a rate move in Feb). April is more than 100% priced. AU-US yield differentials are lower, but haven't seen a sharp move so far today.
  • NZD/USD fell in sympathy with AUD, but also sits up from session lows, last near 0.5660/65. Earlier the RBNZ's Conway stated that further easing from the central bank is likely (as they signalled late last year).
  • The AUD/NZD cross is back in the 1.1015/20 region, post CPI lows were at 1.1007, levels last seen in Dec 2024.
  • Regional equity markets, which are open, are higher, while US futures are also a touch firmer, but have been largely range bound. US yields sit slightly lower, with losses around 1bps or slightly more.
  • USD/JPY is a touch lower, last near 155.30 but remains within recent ranges. Monday highs were just short of 156.00 and today we got to 155.79 in earlier dealings. The BoJ Dec Mins were released earlier, with "Many members pointed out that economic activity and prices had been developing in line with the Bank's outlook at the meeting." This obviously came before the central bank raised rates at the Jan policy meeting.
  • Looking ahead, we have the Fed decision as the main focus point. No change is expected but the tone will be watched in terms of the outlook. Before the Fed, the BoC is expected to cut rates by 25bps.