Ahead Today
G3: US Durable Goods, US Consumer Confidence, US S&P House Prices
Asia: Taiwan Export Orders
Market Highlights
US Treasury yields rose and equity markets sold off slightly, as markets waited for key macro data out this week such as PCE inflation and US ISM. US macro data pointed to an economy which was still humming along, albeit with a downside surprise in new home sales coupled with better-than-expected Dallas Fed Manufacturing Index. Markets will watch closely for US durable goods and consumer confidence data out later today.
Japan’s January inflation was stronger than expected across various measures, including the headline rate at 2.2%yoy (vs consensus of 1.9%yoy), and excluding fresh food and energy at 3.5%yoy. While USDJPY did not move too much on the back of the higher-than-expected inflation out of Japan, we could certainly get more volatility in the lead up to the initial wage results out in middle of March, and also the Bank of Japan meeting on 19 March.
Overall, the US Dollar was slightly weaker by -0.1%, with USDJPY at 150.56 and EURUSD at 1.084.
Regional FX
Asian FX markets traded mixed against the Dollar, with THB and PHP underperforming (-0.7%). Markets are watching closely at China’s manufacturing and non-manufacturing PMIs out later this week, together with growth targets and possible policy direction during the National People’s Congress from 5 March. Singapore released its industrial production estimates for January, which was weaker than expected at -5.7%mom sa and declining 3.4%yoy, driven lower by the electronics sector. It’ll be important to watch to see if this is the start of a trend, or just some volatility in manufacturing, given that we are still seeing decent pickup in exports out of other Asian economies such as Korea, Taiwan and Vietnam. On that front, we will also have Taiwan’s exports orders for January out later today.
