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Asia Market News: Japan Services PMI and Aussie Labor Market Data Impress

By:
Bob Mason
Published: Mar 21, 2024, 02:52 GMT+00:00

Key Points:

  • On Thursday, the Asian equity markets tracked overnight gains from the US, with the Nikkei retaking the 40,000 handle.
  • Australian labor market data for February could draw the attention of the RBA, with the unemployment rate falling from 4.1% to 3.7%.
  • Service sector PMI data from Japan painted a rosier outlook for the Japanese economy.
Asia Market News

In this article:

Asian Equity Markets Respond to the Overnight FOMC Projections and Press Conference

The Asian equity markets responded to the overnight FOMC economic projections and Fed Chair Powell press conference. On Thursday, the Hang Seng Index led the Nikkei and the ASX 200 into positive territory. The FOMC projected a median 2024 Fed Funds rate of 4.6%, unchanged from December. Significantly, the Fed expected three rate cuts in 2024, driving demand for riskier assets.

The Hang Seng Index was up 1.92% to 16,860 in the morning session, with the ASX 200 and Nikkei up 0.53% and 1.18%, respectively. Significantly, the Nikkei retook the 40,000 handle despite a weaker USD/JPY.

Hang Seng Index on the rise.
Hang Seng Index Daily Chart 210324

Australian Labor Market Data Fuels an Aussie Dollar Breakout

On Thursday, Australian labor market data for February could influence the RBA interest rate trajectory. The Australian unemployment rate fell from 4.1% to 3.7%. Economists forecast an unemployment rate of 4.0%.

According to the Australian Bureau of Statistics,

  • The participation rate increased from 66.6% to 66.7%.
  • Full-time employment jumped 78,200 to 9,824,900 people.
  • Part-time employment increased by 38,300 to 4,444,700.
  • The underemployment rate fell from 6.7% to 6.6%.

The sharp fall in the Australian unemployment rate could support wage growth and increase disposable income. Upward trends in disposable income may fuel consumer spending and demand-driven inflation. The RBA could respond to a pickup in consumption by raising the cash rate to dampen inflationary pressures.

The AUD/USD reacted to the upbeat numbers, rising from $0.65902 to a Thursday session high of $0.66238. On Thursday, the Aussie dollar was up 0.46% to $0.66163.

AUD/USD rallies on employment data.
AUDUSD 3 Minute Chart 210324

Service Sector Activity Heats Up in Japan

The Jibun Services PMI increased from 52.9 to 54.9 in March. Economists forecast an increase to 53.4.

According to the preliminary survey,

  • New orders and new export orders increased at a more marked pace.
  • Input and output prices signaled stronger inflation.
  • The rate of input cost inflation was the highest since September 2023.
  • Employment levels continued to increase at a decent rate, with capacity pressures building.

Service sector activity is a focal point for the Bank of Japan. The Bank of Japan recently discussed the need for the services sector to fuel demand-driven inflationary pressures.

The USD/JPY reacted to the Service PMI numbers, rising to a high of 150.865 before falling to a low of 150.261.

On Thursday, the USD/JPY was down 0.56% to 150.409.

USD/JPY slides on services data from Japan.
USDJPY 30 Minute Chart 210324

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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