Plenty to digest from Japan today. Trade data showed exports rose for a sixth consecutive month in March, but the pace of growth slowed markedly. Exports to the U.S. rose just 3.1% year-on-year, down sharply from a 10.5% gain in February. Exports to China fell 4.8%, and shipments to Europe declined 1.1%, adding to worries that Japan’s external sector may struggle in the months ahead. Economists warn that the temporary boost from pre-tariff demand could now give way to a more sustained slowdown.
Meanwhile, the yen weakened after Japan’s Trade Minister Akazawa confirmed that foreign exchange policy was not discussed during the latest round of US-Japan trade talks. His remarks helped ease market fears that Japan’s currency practices would come under fresh scrutiny from the Trump administration. US officials, including Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, also participated in the meeting, with Trump reportedly reiterating that a deal with Japan remains a “top priority.” Trump weighed in with his concerns on militry costs. Japanese Prime Minister Ishiba struck a cautious tone in his news cnfernce addressing the talks, warning that negotiations ahead would not be easy.
The cautious backdrop was reinforced by comments from Bank of Japan Governor Ueda and policy board member Nakagawa, who maintained that while further interest rate hikes remain likely if the economy and prices evolve in line with the Bank’s outlook, both highlighted U.S. trade policy as one of the biggest external risks to Japan’s recovery.
Elsewhere in the region, New Zealand reported stronger-than-expected consumer price growth in Q1. Core and trimmed mean inflation measures, though, continued edging down to the Reserve Bank of New Zealand’s 2% target.
In Australia, the March jobs report delivered a partial rebound in employment following a soft February, though the gain fell short of expectations. February’s decline was revised lower. This data point shouldn’t dissuade the RBA from a rate cut at its May 19-20 meeting.
Apart from the yen losing ground, so too did other FX against the dollar. EUR/USD heads towards the European Central Bank rate cut decision later back under 1.1400.
Equities in China steadied. Auhtorities there will be announcing a plan for the country’s services sector on Monday.
To all who are taking a break for Easter, have a great time. To all for who Easter is more than just a break, have a great celebration.
