Asia Summary and Highlights 11 Dec

Asia Session

USD is trading broadly higher on Monday's Asia session, following up on the Friday's NFP momentum. U.S. Treasury Yields are higher across the curve while JGBs are closing the opening gap. There is little headline from the BoJ before their meeting next week but most market participants are anticipating at least a change in forward guidance in the coming meeting. USD/JPY is trading 0.46% higher at 145.63.

Over the weekend, we have the Chinese CPI came in much lower at -0.5% y/y vs -0.1% expected. It came as a surprise as there has been more iron ore import from China recently. The Chinese Yuan weakened to level last seen in late November and in the process dragged the Antipodeans lower. Regional equities in China and HK sunk while global equities are performing individually. The AUD/USD is down 0.33% to 0.6553, NZD/USD is 0.19% lower at 0.6110 while USD/CAD rose 0.2% to 1.3604. Elsewhere, EUR/USD is 0.04% higher and GBP/USD is 0.09% lower.

North American session

The USD gained ground across the board after the US employment report, rising around 0.25%. Trade was however choppy. The initial USD bounce was reversed but the USD built modest gains later in the session, before ending a little off post-data highs.

The report itself was on the strong side of expectations, although after revisions the rise in non-farm payrolls was broadly in line with expectations. However, the 0.4% rise in average earnings and the decline in unemployment to 3.7% suggested a stronger labour market, and US yields rose in response. Generally the details are consistent with a modest loss of economic and inflationary momentum but with few signals for any weakness.

December's preliminary Michigan CSI of 69.4 was up from 61.3 and the highest since August. The rise was led by expectations which appear to have been lifted by a sharp fall in inflation expectations following surprising strength in November.