ForexLive Asia-Pacific FX news wrap: Yen surges higher

• Federal Reserve speakers Thursday include Kugler, Goolsbee, Musalem, Barr
• Bank of Japan Expected to Raise Rates to 0.75% in Q3, Reuters Poll Shows
• Bank of Japan Governor Ueda said did not discuss long-term rates with ishba
• Fed’s Jefferson says Fed is in “watch and wait” mode about state of government policy
• Morgan Stanley Turns More Optimistic on China Equities, Sees Structural Shift in Market
• More on Trump’s goal to abolish the IRS – source is US Commerce Secretary Howard Lutnick
• Bank of Japan Governor Ueda is meeting with Japan PM Ishiba
• AUD traders note: Reserve Bank of Australia Governor Bullock speaking on Friday local time
• Trump says a new trade deal with China is possible
• Trump speaking – repeating himself
• RBA Dep Gov Hauser: RBA policy is still restrictive
• RBA Deputy Governor Andrew Hauser is speaking now – live link
• Barclays expects BoJ to raise rates at a six-monthly pace, but risk is front loading
• Tariff talk driving bids back into the USD (USD/JPY excepted!)
• US Commerce Secretary Lutnick says Trump’s goal is to abolish the Internal Revenue Service
• PBOC sets USD/ CNY reference rate for today at 7.1712 (vs. estimate at 7.2856)
• PBOC sets one and five year loan prime rates unchanged
• Fed’s Goolsbee: Inflation has fallen but it is still too high
• US poised to reduce its diplomatic mission in China by up to 10%
• AUD marked higher after another very strong employment report from Australia
• Australia January 2025 unemployment rate 4.1% (vs. 4.1% expected)
• PBOC is expected to set the USD/CNY reference rate at 7.2856 – Reuters estimate
• USD/JPY falling away again. Meanwhile 10-year JGB yield hits highest since November 2009
• Trump repeats he’ll be announcing tariffs on cars, semiconductors, pharma
• Japan Trade Minister to go to US, to seek exemptions from tariffs on steel and automobiles
• Trump says will fill up the Strategic Petroleum Reserve fast
• Trump plans a cash splash with DOGE savings
• RBNZ Governor Orr rules out further 50bp rate cuts (unless there is an economic shock)
• Fed’s Jefferson says the Bank can take its time to consider its next monetary policy move
• EU ready to negotiate on car tariffs with Trump, trade commissioner says
• More from ECB’s Cipollone – spoke on Wednesday – video interview
• Oil – private survey of inventory shows a larger headline crude oil build than expected
• Trade ideas thread – Thursday, 20 February, insightful charts, technical analysis, ideas
• Major stock indices close higher. S&P at record levels
• Forexlive Americas FX news wrap: Trump calls Zelensky a dictator

USD/JPY
tracked more or less steadily lower during the session. Its down more
than a big figure on the session to lows just under 150.30 as I am
writing.

There
was no fresh yen-related news or data of note. We did have news that Japan’s Trade Minister, Yoji Muto, is planning a trip to the United States in March to request that the Trump administration exempt Japan from upcoming tariffs on steel and automobiles. Which hardly seems surprising.

While
USD/JPY was dropping away other FX ticked a little higher against the
USD also. That was until we had remarks from new US Commerce
Secretary Lutnick saying Trump’s goal is to abolish the internal
revenue service:

• “Think
  about it, Donald Trump announces the External Revenue Service, and
  his goal is very simple … his goal is to abolish the Internal
  Revenue Service and let all the outsiders pay”.

‘Outsiders
pay’ is Lutnick referring to Trump’s “External Revenue
Service” role to oversee tariffs and other potential foreign
revenue. Lutnick was speaking in a Fox interview.

The
comments brought out US dollar buyers, sending EUR, AUD, NZD, GBP, CAD falling against the big dollar (USD/JPY tracked sideways for a few
minutes while all this was going on, before resuming its fall).
Non-US FX has recovered, with AUD and NZD pushing to new
session highs since.

From
Australia we had the January employment report, another very strong
one, with jobs added coming in more than double the median forecast. While the
unemployment rate notched higher by 0.1 ppt labour force
participation hit its highest ever recorded, as did the number of
jobs.

Reserve
Bank of Australia Deputy Governor Andrew Hauser spoke
in an interview
with Bloomberg TV.
While most of comments were erring toward the ‘data dependence’
view on forward guidance and that inflation is still a challenge, he
did say, which I thought was very instructive, that the Bank’s
modelling prior to Tuesday’s rate cut was that inflation should
decline even if rates were held steady. A wee more dovish, or at
least less hawkish, than I thought he would be.

In
other central bank news:

• Vice
  Chair of the Board of Governors of the Federal Reserve Jefferson
  spoke, said the Fed can take its time when weighing the next monetary
  policy move;
• Bank
  of Japan Governor Ueda met with Japanese Prime Minister Ishiba –
  the two meet regularly;
• The
  People’s Bank of China lefts its 1- and 5-year Loan Prime Rates
  (LPRs) unchanged again, at 3.1% and 3.6% respectively.

We
heard from Trump a few times during the session, including he is
considering

• giving
  20% of savings from DOGE cuts as payouts to Americans
• another
  20% of savings could go toward paying down the federal debt

and

• he
  will fill up the US Strategic Petroleum Reserve (SPR) ‘fast’

and

• he’ll
  be announcing tariffs on cars, and semiconductors, and chips, and
  pharmaceuticals, drugs and pharmaceuticals, and lumber, probably, and
  some other things over the next month, or sooner

(On
this last point, Trump said all this yesterday)

This article was written by Eamonn Sheridan at www.forexlive.com.