Asia Summary and Highlights 19 Jan

Asia Session

The Japan December CPI followed the pace of moderation shown in Tokyo CPI last week. National December Headline CPI y/y came in lower at 2.6% from 2.8%, less fresh food 2.3% from 2.5%, less fresh food and energy at 3.7% from 3.8%. Ex fresh food and energy CPI remain stubborn but we are seeing headline and ex fresh food CPI moving closer to 2%. The report does not change our forecast nor the broader picture with BoJ  more focused on wage. The softer CPI sent USD/JPY higher and was met with "jawbone intervention" from Suzuki. Yet, USD/JPY still trades 0.28% higher at 148.55. Both the U.S. Treasury and JGB Yields  are higher across the curve.

Despite guidelines from the Chinese government to limit short sell, regional equities remain depressed. However, the "National Team" stepped in to sell USD and buy Yuan to stall the fall after PBOC's strong fix. Aussie received some proxy support and only got a haircut of 0.02% to trade lower at 0.6571, NZD/USD slipped further by 0.34% to 0.6095 while USD/CAD rose 0.05%. Elsewhere, EUR/USD is 0.05% higher and GBP/USD is 0.04% lower. 

North American session
The USD made general gains through the North American session, helped by the lower than expected jobless claims data in the latest week. The USD advanced around 0.2% across the board, with the exception of GBP which held its own against the USD and consequently gained on the crosses. There was also some particular weakness in the SEK, with EUR/SEK gaining 3 figures, while EUR/CHF also made small gains.
The latest US data provides more evidence of strength than weakness, with initial claims at 187k from 203k the lowest since September 2022, and housing starts, -4.3% to 1460k, and permits, +1.9% to 1495k, both stronger than expected. However the Philly Fed manufacturing survey at -10.6 from -12.8 remains weak.