NZ CPI weakest q/q since 2021

Asia market update: NZ CPI weakest q/q since 2021; JP Trade data mixed; Rio Q1 production mixed with China emphasized; Continued Asian currency pressures; Aussie employment tomorrow.

General trend

- New Zealand Q1 CPI printed its weakest quarterly reading since mid-2021, however non-tradeable CPI was higher than expected for the quarter. Confusion in prints reported across major wire services resulted in volatility in the kiwi for some minutes, with the Kiwi eventually settling at the range highs for the prior ~18 hours, just under 59c. (Kiwi was as high as ~63.6c as recently as Dec).

- Additionally, RBNZ’s Q1 Sectoral Factor Model Inflation Index came in lower than prior quarter.

- Japan’s March trade balance confirmed as being in surplus, however the deficit for the March adjusted trade balance was more than double estimates. Yen barely reacted. Exports grew for the fourth month with Chinese exports surprisingly robust +12.6% (v +2.5% prior), while EU exports fell from 14.6% prior down to 3.0% in March. Of note in the components semiconductors +9.5% and autos +7.1% y/y in value terms.

- Rio Tinto affirmed all FY24 production guidance, but reported iron ore shipments for Q1 were -5% y/y on soft China demand, with iron ore production -11% q/q. However, demand for copper has been robust, despite China’s weakening property sector, with demand driven by energy transition sectors, such as EVs.

- US equity FUTs +0.2% during Asian trading.

Asian currencies under continued pressure; Summary:

- After yesterday’s broad currency sell off in Asia, currencies were steadier today, with the Kiwi and Aussie both outperforming +0.3 to +0.4%.

- However, after yesterday’s triple intervention by the Indonesian Central Bank, continued weakness has seen the Rupiah fell 0.5% to its lowest level since Apr 8, 2020, at the height of the pandemic. Later the Central Bank intervened for the second consecutive day.

- US financial press put the violent but brief 1 cent spike in JPY during US trading hours (as it approached 155) was due to trader nervousness around potential intervention rather than any suggested official action.

- Korean Finance Ministry took the unusual step of saying that both it and their counterparts in Japan were ready to intervene by ‘using tools at our disposal’ for FX volatility.

- Philippines Central Bank Gov said unless movements are sharp, can allow adjustments to happen to the Peso. PHP proceeded to fall to its lowest level since Sept 2023, just above 57 to USD

- Vietnam Dong (VND) trades at fresh record lows.

- USD/THB Thai Baht falls up to 1.1% to 36.84 against USD, lowest level since Oct 10th, 2023.

- China PBOC sets Yuan reference rate: 7.1025 V 7.1028 Prior (keeps fix steady after yesterday's weaker setting).

Looking ahead (Asian time zone)

- Wed Apr 17th China YTD FDI (tentative), (Wed eve UK CPI).

- Thu Apr 18th Australia employment, RBA Bulletin.

- Friday Apr 19th Japan National CPI, (Fri eve UK Retail Sales).

Holidays in Asia this week

- Wed Apr 17th India.

- Thu Apr 18th Vietnam.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.1% at 7,607.

- Australia Mar Westpac Leading Index M/M: -0.05% v 0.1% prior.

- Australia sells A$800M v A$800M indicated in 4.50% Apr 2033 bonds; Avg Yield: 4.3558% v 4.0100% prior; bid-to-cover: 2.66x v 3.11x prior.

- Rio Tinto Reports Q1 Pilbara iron ore shipments 78.0Mt v 82.5Mt y/y, Pilbara iron production 77.9Mt v 79.3Mt y/y (-11% q/q).

- New Zeland Q1 CPI Q/Q: 0.6% V 0.6%E; Y/Y: 4.0% V 4.0%E (weakest q/q since mid-2021).

- Reserve Bank of New Zealand (RBNZ) Q1 Sectoral Factor Model Inflation Index Y/Y: 4.3% v 4.7% prior (revised).

- ASB bank now expects RBNZ will cut OCR cash rate in Feb 2025 (prior Nov 2024).

- Fonterra Global Dairy Trade Auction Dairy Trade price index: +0.1% v -2.8% prior.

- Reserve Bank of New Zealand (RBNZ): Opens consultation on digital currency for New Zealand.

- New Zealand PM Luxon: Hope inflation reaches 1-3% target by year-end [overnight update].

China/Hong Kong

- Hang Seng opens -0.1% at 16,225; Shanghai Composite opens flat at 3,008.

- Morgan Stanley reportedly plans biggest round of China job cuts in years; Asia Pacific investment banking unit to cut up to 50 jobs this week - US financial press.

- China Cyberspace Administration [internet watchdog] warns about spreading rumors about listed cos. - China Economy Daily.

- China PBOC: Confirms US/China working group meeting was held; discussed monetary policy; agreed to maintain talks.

- China Defense Min: China and the US should explore ways to get along with each other - On conversation with US counterpart.

- China CSRC: Tighter delisting rules won't impact market [overnight update].

- (DE) Germany Chancellor Scholz: Found a pragmatic environment in China for talks about creating a level playing field [overnight update].

- IMF Raises China 2024 GDP growth forecast from 4.6% to 5.2%; Sets China GDP growth forecast at 4.1%; We will be assessing China growth after its 5.3% Q1 GDP reading and might revise our GDP forecast higher [overnight update].

- China Pres Xi puts forth four principles to resolve Ukraine crisis as soon as possible during German Chancellor Scholz visit [overnight update].

- Fitch revises outlook of Alibaba and Tencent to Negative from Stable; Follows sovereign action on China [overnight update].

- Fitch lowers outlook on China State banking sector from Stable to Negative; affirms rating [overnight update].

- China Financial Regulator: To push for more credit support for manufacturing [overnight update].

- China PBOC sets Yuan reference rate: 7.1025 V 7.1028 Prior (keeps fix steady after yesterday's weaker setting).

- China PBOC Open Market Operation (OMO): Sells CNY2B in 7-day reverse repos; Net CNY0B v net CNY0B prior.

Japan

- Nikkei 225 opens +0.3% at 38,547.

- Japan Mar trade balance: +¥366.5B V +¥345.5BE (Adj Trade Balance: -¥701.5B v -¥302.5Be).

- Bank of Japan (BOJ) announcement related to outright bond buying operations: For 1-3 Years; 3-5 Years; 5-10 Years and 10-25 Years (inline with previous April ops).

- Japan financial regulators plan to make it easier for companies to identify who actually controls stakes in them - Nikkei.

- IMF affirms Japan 2024GDP forecast from 0.9% to 0.9%; Raises Japan 2025 GDP forecast from 0.8% to 1.0% [overnight update].

South Korea

- Kospi opens +0.4% at 2,619.

- South Korea Finance Ministry: Korea and Japan finance chiefs share concerns on weakening Won and Yen; Both countries could take measures to stabilize FX volatility - statement after joint meeting.

- Bank of Korea (BOK) Gov Rhee: Recent Won movement is 'a bit excessive'; reiterates has tools to take steps on FX volatility.

- Bank of Korea (BOK) Cho [outgoing board member]: Reiterates no rush to cut rates [overnight update].

Other Asia

- Apple CEO: Will look into the possibility to build manufacturing facility in Indonesia.

- USD/IDR (ID) Indonesia Central Bank (BI) continues to intervene in FX markets 'to ensure balance of supply and demand' - official.

- USD/IDR Indonesia Rupiah falls to lowest since Apr 8th, 2020.

- Philippines Central Bank (BSP) Gov Remolona: PHP 'adjusting to some events'; I would not say it is performing poorly - comments on Peso.

- Vietnam Central Bank (SBV) has reportedly lent $23.5B to support Saigon Joint Stock Commercial Bank (SCB) since Oct 2022 – Press.

- USD/VND Vietnam Dong currency (VND) trades at another fresh record low.

- Singapore Mar Non-oil Domestic Exports M/M: -8.4% v 4.4%e; Y/Y: -20.7% v -7.4%e.

- Malaysia Econ Min: Reiterates weak Ringgit has not affected Malaysia's economic plans, including cutting subsidies - interview.

North America

- (US) Mar housing starts: 1.321M V 1.485ME (below all estimates, lowest since Aug 2023); building permits: 1.458M V 1.510ME; Single family starts: -12.4% m/m.

- CA) CANADA MAR CPI M/M: 0.6% V 0.7%E; Y/Y: 2.9% V 2.9%E.

- (US) Fed's Jefferson (voter): If inflation is more persistent than expected it will be appropriate to hold rates in place for longer; Uncertainty remains high.

- (US) Mar industrial production M/M: 0.4% V 0.4%E; capacity utilization: 78.4% V 78.5%E.

- US) Fed’s Barkin (voter): CPI data has not been supportive of a soft landing.

- (US) Fed Chair Powell: Restrictive policy needs further time to work; Will likely take longer for us to gain confidence on inflation following the recent data.

Europe

- (EU) ECB Villeroy (France): Expects Jun rate cut to be followed by others with pragmatic and agile gradualism.

- (EU) ECB Chief Lagarde: ECB will cut rates soon barring any major surprises - CNBC.

- (EU) ECB Villeroy (France): ECB will decide based on Euro-area data and outlook; Expect June cut barring any new shocks.

- IMF updates world economic outlook (WEO) Raises FY24 GLOBAL GDP growth forecast from 3.1% TO 3.2%.

Levels as of 01:20 ET

- Nikkei 225 -0.4%; ASX 200 +0.1%; Hang Seng -0.3; Shanghai Composite +1.1%; Kospi -0.2%.

- Equity S&P500 Futures: +0.2%; Nasdaq100 +0.2%, Dax +0.1% ; FTSE100 +0.1%.

- EUR 1.0612-1.0635; JPY 154.60-154.74 ; AUD 0.6400-0.6424 ; NZD 0.5861-0.5908.

- Gold -0.5% at $2,396/oz; Crude Oil -0.7% at $84.77/brl; Copper -0.1% at $4.2942/lb.