investingLive Asia-Pacific FX news wrap: IEA propose largest-ever release of oil reserves

Summary:

• Oil markets remained in focus as the U.S. said it eliminated 16 Iranian mine-laying vessels near the Strait of Hormuz.

• A Wall Street Journal report said the IEA has proposed the largest-ever release of strategic oil reserves, with countries to decide today.

• The G7 will meet at 1400 GMT to discuss energy coordination amid the Middle East conflict.

• Japan signalled it could release oil reserves independently if needed, while February PPI data came in softer.

• RBA Deputy Governor Andrew Hauser’s hawkish remarks yesterday triggered a wave of forecasts for a March 17 rate hike.

• AUD/USD rose to levels last seen in mid-2022, while Asian equities rallied, with the Nikkei above 55,500.

Oil markets remained a key focus during the Asia session as developments around the Strait of Hormuz and emergency energy policy discussions helped drive sentiment.

The U.S. military said it had eliminated 16 Iranian mine-laying vessels near the Strait of Hormuz, highlighting the security risks facing one of the world’s most important oil shipping routes. A Wall Street Journal report said the International Energy Agency has proposed the largest-ever coordinated release of strategic oil reserves to help stabilise crude prices. Countries are expected to decide later today whether to proceed with the release.

Energy security will also be on the agenda at the G7 meeting scheduled for 1400 GMT, where leaders are set to discuss potential coordination measures. Oil prices have eased somewhat following these developments.

Central bank developments also drew attention in the region. RBA Deputy Governor Andrew Hauser delivered remarks on a podcast Tuesday that were interpreted as notably hawkish just one week ahead of the next Reserve Bank policy meeting. His comments have prompted a cascade of analyst forecasts for a March 17 rate hike.

Westpac, NAB, Citi and Deutsche Bank now expect the RBA to raise rates in both March and May, while Bank of America, UBS and Capital Economics forecast a hike at next week’s meeting. The shift in expectations helped push AUD/USD to levels last seen in mid-2022.

In Japan, Trade Minister Akazawa said the government could release oil reserves independently if necessary and would not rule out any measures to ensure energy stability. Japan also released February producer price data, which showed a modest easing in wholesale inflation. Attention now turns to next week’s Bank of Japan meeting.

Regional equities were firm. China’s new energy sector climbed more than 3%, while Japan’s Nikkei rose over 2%, trading above the 55,500 level.