MALAYSIA: Exports Strong Whilst Imports Decline Driving Trade Surplus

In today's Asia-Pac session, TYM5 is 110-22, -0-03+ from closing levels. 

• According to MNI’s technicals team, the current price for TYM5 is still inside initial technical levels: resistance at 111-25 (Mar 11 high), support at 110-12.5/110-00 (Low Mar 6 & 13 / High Feb 7).  
• Cash US tsys are ~1bp cheaper in today’s Asia-Pac session ahead of Wednesday's FOMC policy announcement. The majority of analysts expects the FOMC to leave its Dot Plot funds rate medians unchanged in March compared with the December meeting. That would imply the Fed is still pencilling in 50bp of cuts in 2025 (to 3.9%) and 2026 (to 3.4%), with a further 25bp cut in 2027 (to 3.1%).
• Yesterday, projected rate cuts through mid-2025 closed steady to softer follows: Mar'25 steady at -2bp, May'25 at -5.4bp, Jun'25 at -18.2bp, Jul'25 at -26.7bp.

February jobs data are released on Thursday and will be again be scrutinised, especially as the RBA said that the tight labour market was the strongest argument to leave policy on hold in February. It is also a key reason why “the Board remains cautious on prospects for further policy easing”, as the labour market “tightened a little further in late 2024” and could be signalling the economy is stronger than assumed. The RBA is also focussed on the underemployment & youth unemployment rates and change in hours worked.

• Employment has consistently printed stronger than expected with January up 44k and 2024 seeing 72k more jobs than 2023 despite restrictive monetary policy.
• Bloomberg consensus is forecasting a 30k rise in employment in February with projections ranging from +15k to +60k with most estimates between +25k and +40k. CBA and Westpac expectations are in line with consensus, while ANZ and NAB are higher at 35k and 45k respectively.
• The 3-month average employment to January was 44.4k and 6-month 41.5k, thus a consensus print would be below the recent trend.
• The unemployment rate is forecast to be stable at 4.1%. Forecasts are between 4.0% and 4.2% with more forecasts for it to fall than to rise at 10 vs 3. January showed an elevated number of people without a job but having one to start in February, which could weigh on February’s unemployment rate. CBA is in line with consensus, whereas ANZ, NAB and Westpac expect it to fall 0.1pp to 4.0%.
• The participation rate is projected to be steady at the record 67.3% (forecast range 67.2-67.4%).

USD/JPY is little changed post the BoJ decision. We were last 149.30/35, close toend Tuesday levels in the US. Ranges today are 149.20-64. The BOJ delivered no change as widely expected, with yen briefly strengthening as BoJ headlines crossed that the virtuous cycle of wages and prices was intensifying, but there was no follow through.

• Focus now shifts to Ueda' press conference later (3:30pm local time). Focus will be on next hike timing, which today's meeting left the door firmly ajar, albeit highlighting large economic uncertainties around the outlook. Current market pricing doesn't have another full rate hike priced in until around the Oct meeting, later this year.
• Attention will then turn to the Fed. US-JP yield differentials have stabilized around Sep lows from last year, the 10yr spread last close to +278bps, the 2yr spread near +322bps. Directionally this stability is not providing further downside impetus to USD/JPY like it was in late Feb/early March.
• Note this Friday we get National CPI data, the market expects headline and core ex fresh food to soften, but the measure which excludes energy is expected to edge up to 2.6%y/y (Jan's read was 2.5%).
• For USD/JPY technicals, upside focus is at the following levels: 
  RES 2: 151.30/36 High Mar 3 / 50-day EMA 
• RES 1: 150.18 High Mar 5 
• Downside focus rests at:
• SUP 1: 147.45/146.54 Low Mar 14 / 11 and the bear trigger  
• SUP 2: 145.40 2.0% 10-dma envelope.