Asia Summary and Highlights 31 Jan

Asia Session

Australian Q4 headline CPI has come in lower at 4.1% y/y vs 4.3% expected and shows further moderation from 5.4% in Q3. In q/q basis, headline CPI is also lower at 0.6% from 1.2% in Q3. RBA trimmed mean CPI is 4.2% y/y and 0.8% q/q, both shows moderation and misses estimate. It aligns with our forecast and should allow the RBA to remain on hold.  AUD/USD sunk on its mark to 0.6565, 0.56% lower for the session along with sour regional sentiment. NZD/USD also dragged lower by soft sentiment by 0.38% to 0.6612 while USD/CAD rose 0.16% as oil lost 10 cents.

While we are waiting for U.S. military action in response to the latest attack, Iran's UN envoy warns any attacks will be met with response, indicating such tit for tat retaliation will persist and increase uncertainty in the region. General sentiment is tilting to the soft side but we could see the indecisiveness as ranges are so far small. U.S. Treasury Yields are lower across the curve while JGB yields are higher. USD/JPY is trading 0.06% higher at 147.69. Elsewhere, EUR/USD is down 0.24% and GBP/USD is down 0.17%. 

North American session

The USD gained ground against the JPY through the North American session, rising around half a figure, peaking just below 148, on the back of a stronger than expected JOLTS job openings number which pushed up US yields. Other USD pairs were not much changed, with USD gains on the data being modest and not persisting. USD/CAD slipped below 1.34. UST yield gains on the data were sustained at the front end but not at the long end.

December JOLTS job openings at 9.026m from 8.925m (revised up from 8.79m) add to the case that the labor market is seeing some acceleration, which a rise in January consumer confidence to a 2-year high of 114.8 from 108.8 (December was revised down from 110.7) also implies.