Asia Summary and Highlights 9 Jan

Asia Session

The Japan November 2025 Household Spending came in stronger than estimate at +2.9% y/y. While it is generally positive for Japanese economy, the poor wage data released earlier in the week undermined the potential persistent strength of household spending. China has begun restricting exports of rare earths and rare-earth magnets to Japan, further leveraging their natural resources in the geopolitical playing field. USD/JPY is trading 0.35% higher at 157.38 with both the U.S. Treasury and JGB yields are higher.

The broader risk sentiment is undecided to end the first trading week in Asia. While Trump proposes $200bn mortgage-bond buying plan to cut US home loan rates, it seems to be more a political stunt, along with his previous suggestion of banning institution buying single homes. These look like acts towards the mid term election.  U.S. major equity indexes are in the red while regional equities, especially Nikkei, outperforms. AUD/USD is trading 0.07% lower at 0.6695. NZD/USD is trading 0.18% lower while USD/CAD rises 0.03%. Else, EUR/USD and GBP/USD are down 0.07%.

North American session

US data was USD supportive, most notably a sharp fall in the October trade deficit to $29.4bn from $48.1bn, though with most of the surprise coming from a sharp rise in exports of nonmonetary gold and a sharp fall in imports of pharmaceutical preparations the drop does not look sustainable. Initial claims at 208k from 200k remain low while Q3 non-farm productivity at 4.9% was strong as expected. Unit labor costs were weak at -1.9% but a tariff-led surge in non-labor costs left the overall implicit deflator strong at 4.0%. 

 USD/JPY rose to 157 from 156.70, and EUR/USD fell to 1.1650 from 1.1675. EUR/GBP was softer, slipping to .8675 from .8685.  Despite a sharp rise in oil prices, the commodity currencies were little changed.