ForexLive Asia-Pacific FX news wrap: US dollar extended its gains a little

Forex
markets saw a small degree of follow through for the US dollar upmove
during the session here today. Ranges were small compared to the huge
swing higher for the dollar on Tuesday in US time as Powell shifted a
little more hawkish. Regional stocks declined, as you’d expect.

Contrasting
with Powell’s move Reserve Bank of Australia Governor Lowe spoke
today following his shift to a touch less hawkish at yesterday’s
monetary policy decision. If you recall it was an as expected +25bp
rate hike with a softer tone in the Statement. Lowe elaborated on
this less hawkish tone in today’s comments. In summary (this from
earlier):

• Lowe
  has pointed out that the data on jobs, retail spending, business
  surveys, along with PCI, are all important considerations. If those
  data suggest a pause is needed then the Board will pause its rate
  hikes. If not, then it’ll be another hike. Lowe said more aggressive
  rate hikes were considered and that this would bring CPI back closer
  to target prior to 2025 the bank currently forecasts, but this would
  come at a big cost in unemployment.
• Also,
  total required mortgage payments are expected to reach around 9.5% of
  household disposable income as fixed rate loans roll off and
  refinanced. This would be close to a record high and would trim
  demand in the economy.

On
the data front we had Japan recording a record
current account deficit, and trade deficit, in January. The global slowdown and China’s
Lunar New Year holidays were cited in reasons. As a consolation
prize, the primary income balance, another element of the current
account, rose 350 bn yen from a year earlier to a 2.29 trillion yen
surplus in January, driven by higher interest payments received from
its investment in foreign securities.

News
flow otherwise was very light indeed.

Asian
equity markets:

• China’s
  Shanghai Composite -0.5%

• Hong
  Kong’s Hang Seng -2.5%

• South
  Korea’s KOSPI -1.4%

• Australia’s
  S&P/ASX 200 -2%