investingLive Asia-Pacific FX information wrap: Yen swings on official remarks

At a glance:

• Japan seizes Chinese vessel, adding geopolitical tension

• BOJ adviser signals no rush for March hike; USD/JPY rebounds

• China home prices deepen decline across 62 cities

• FX mostly rangebound ahead of US CPI

• USS Gerald R. Ford redeployed to Middle East; oil muted

• EU aviation regulator extends Iran airspace warning

• Gold and silver firm

• RBNZ decision next week; inflation expectations mixed

• Japanese equities ease after strong weekly gains

Japan seized a Chinese fishing vessel inside its exclusive economic zone off Nagasaki and arrested the skipper after the boat allegedly fled inspection. The move risks adding fresh strain to already tense Tokyo–Beijing relations, particularly against the backdrop of ongoing trade and security friction between the two countries.

On the monetary front, an adviser to Prime Minister Sanae Takaichi said the government does not necessarily need to appoint reflationists to upcoming Bank of Japan board vacancies. He added the BOJ may see scope to raise rates later this year but is unlikely to move in March. The remarks were interpreted as reducing the probability of a near-term hike, providing a modest headwind for the yen. USD/JPY bounced toward 153.30 in response.

Later more hawkish comments from BoJ Board member Tamura saw the yen gain back, USD/JPY down to circa 152.85.

From China, new home prices fell 0.4% month-on-month and 3.1% year-on-year in January, marking the steepest annual drop in seven months. Price declines were recorded in 62 of 70 cities surveyed, highlighting persistent weakness in the property sector despite policy easing and the removal of developer debt caps.

Major FX pairs against the US dollar traded largely sideways in subdued ranges as traders await US CPI data due at 8:30 a.m. US Eastern time on Friday.

Geopolitically, the USS Gerald R. Ford carrier strike group will be redirected from the Caribbean to the Middle East, joining the USS Abraham Lincoln in the Persian Gulf as pressure on Iran intensifies. Crude oil showed little reaction, with expectations of a second carrier presence having built in recent weeks. Separately, the European Union Aviation Safety Agency extended its recommendation that airlines avoid Iranian airspace through March 31, citing elevated risks.

Gold and silver edged higher.

Japanese equities, including the Nikkei and Topix, pulled back slightly after solid gains earlier in the week, tracking Wall Street’s Thursday weakness.

Asia-Pac
stocks:

• Japan
  (Nikkei 225) -0.68%
• Hong
  Kong (Hang Seng) -1.79%
• Shanghai
  Composite -0.70%
• Australia
  (S&P/ASX 200) -1.37%

Looking ahead, attention turns to the February 18 Reserve Bank of New Zealand policy decision, where a hold is widely expected. Inflation expectations data released today showed mixed signals.