• USD/JPY extends the losses amid risk reset.
  • Tokyo inflation data remains largely unchanged, core inflation matches forecast.
  • Coronavirus spreads in the US, House voting on COVID-19 bill is in focus.

While following mostly unchanged Japan’s inflation data, USD/JPY extends the previous day’s declines to 109.25 before a few minutes of the Tokyo open on Friday.

Tokyo Consumer Price Index (CPI) for March reprinted the previous 0.4% YoY figures while stepping behind the 0.5% forecast. The CPI ex Food, Energy matched prior and expectations of 0.7% while the CPI ex-Fresh Food matched the consensus of 0.4% versus 0.5% prior.

Also read: Tokyo area march overall cpi +0.4 pct YoY

The coronavirus (COVID-19) pandemic has been spreading speedily in the US off-late. The world’s largest economy recently crossed China with more than 81,000 cases of the virus. The epidemic has already fuelled the US Jobless Claims, which rose from 282K (revised) to 3,283K. Even so, the CNBC came out with the news, while relying on the New York Mayor Bill De Blasio, to suggest that the half a million New Yorkers will be unemployed soon.

While the news recently probed the risk-takers, overall trade sentiment remained positive the previous day with Wall Street marking the third day of gains.

Also challenging the risk tone could be the news from Saudi Arabia that downed Houthi drones.

On the positive side, US President Donald Trump reiterated nearness to the $2 trillion aid package, which passed through the Senate on Thursday and will be voted in the House today. The Republican leader also mentioned that he will have a call with China’s President XI Jinping and talk about the virus with this.

Although House voting on the US COVID-19 Bill will be the key, US Michigan Consumer Sentiment and virus updates will also be important to follow.

Technical analysis

A daily close beyond 111.70 becomes pre-requisite for the pair to recall buyers targeting February month top near 112.25, until then 21-day SMA level of 107.80 remains on the sellers’ radar.

 

Core consumer prices in Tokyo rose 0.4 percent in March from a year earlier, government data showed on Friday. The core consumer price index for Japan’s capital, which includes oil products but excludes fresh food prices, compared with economists’ median estimate for a 0.4 percent annual rise.

  • Tokyo area March cpi excluding fresh food, energy prices +0.7 pct YoY – govt.
  • Tokyo area March coreCPI +0.4 pct YoY – govt (Reuters poll: +0.4 pct).

Market implications

The data is not important at the moment. COVID-19 is. The re-emergence in the Tokyo new cases of the virus is concerning markets and the estimates of damage from the postponement of this year’s Olympic Gamse in Tokyo by one year range from 600 billion yen (US$5.4 billion) to 2 trillion yen (US$18 billion). However, eve the delay is overshadowed by the coronavirus outbreak which has deepened Japan’s recession fears – Tourism has ground to a halt.

 

At the Task Force presser, The US President Donald Trump is moving from one topic of discussion to another but mostly focussed on COVID-19.

Trump also said on Thursday he was likely to be speaking with President Xi Jinping of China later in the day and cast doubt on Beijing’s figures about coronavirus cases as the number in the United States reached about 70,000. Trump has praised Xi’s handling of the coronavirus while also emphasizing that it originated in China and accusing the country of not being transparent enough about it.

Key comments

  • Trump says navy hospital ship comfort due to arrive in new york harbour on Monday.
  • House must now pass the stimulus package without delay.
  • Trump says he will be on hand at the Norfolk naval base in Virginia to see it off on Saturday.
  • I think we are doing well with the vaccines, we’re going to know very soon about a lot of them.
  • People want to go back to work, (to work)
  • We have to go back (to work). 
  • People will be practising social distancing.
  • We have to keep airlines going.
  • We will work hard to help cruise lines.
  • Will be discussing the virus with Xi tonight. 
  • “I’ll have a call with president xi of china” tonight, adding the coronavirus “came from china” and that country took advantage of the US until he came to the Whitehouse.
  • Economic uncertainty hasn’t passed.
  • Says he has used defense production act on “two minor occasions”.
  • Says he likes the idea that cruise lines have to register in united states to receive relief.
  • Says airlines are vital to our country, we need to keep the airlines going.
  • Says china’s Xi did not ask him to “calm down” the language he uses to refer to coronavirus.
  • Says looks like US can do another trade deal with China, though it may have to wait for US presidential election.
  • Trump says looks like US can do another trade deal with China, though it may have to wait for US presidential election. 
  • US Vice president pence says Abbott labs has submitted to FDA for approval of a coronavirus test that gives results in 15 minutes.

Market implications

US benchmarks were rallying hard on Thursday on a strongly positive week for stocks as stimulus kicks investors risk appetites back into play as the US Senate passage of a $2 trillion stimulus package spurred the markets on, seemingly ignoring the hard data with the first-time jobless claims ran up to a record 3.28 million last week.

  • Wall Street Close: US benchmarks were rallying hard on Thursday, cheering stimulus

 

 

  • NZD/USD fails to hold onto a four-day winning streak.
  • New Zealand’s second-tier data came in weaker.
  • The US COVID-19 Task Force Briefing suggests Trump-Xi talk.
  • US House voting on the coronavirus bill, virus updates will provide fresh impulse.

NZD/USD pulls back from an eight-day top to 0.5945 amid the early Asian session on Friday.  The kiwi pair recently witnessed declines following New Zealand’s ANZ-Roy Morgan Consumer Confidence and Total Filled Jobs data while the US dollar seems to have benefited from the calls of the US-China talk and risk reset.

New Zealand’s March month ANZ-Roy Morgan Consumer Confidence slipped below 122.1 prior to 106.3 whereas the Total Filled Jobs for February rose to 2.21M from 2.2 earlier.

In his Coronavirus Task Force Briefings, US President Donald Trump signaled that he will talk to China’s President Xi Jinping and discuss the virus issue on Thursday. The US leader also pushed for a US coronavirus bill that is in the final stages of being the law.

The US dollar dropped earlier amid the coronavirus (COVID-19) outbreak in the world’s largest economy. The cases grew beyond 81,000, as per the New York Times, while surpassing China. Furthering the greenback weakness was a spike in the Jobless Claims that rose beyond 3.0 million from a measure upwardly revised 282K.

On the other hand, the risk-tone remained positive with Wall Street marking the third day in green while the US 10-year treasury yields also recovering back to 0.85%. However, the stock futures are showing a sign of risk reset off-late.

Looking forward, market players are likely to concentrate more on the US House voting on the bill as well as virus headlines while comments from the Trump-Xi call and the US Michigan Consumer Sentiment might also offer intermediate moves.

Technical analysis

A sustained break of a 10-day SMA level of 0.5845 enables the buyers to target 21-day SMA near 0.6060.