Asia Summary and Highlights 20 Dec

Asia Session

The Japanese November y/y Trade Data shows export contracted for the first time in three months while import continue to witness double digits losses. However, on headline balance it is beating estimates as import contracted much larger than expected. Exports to Asia continue to fall, which seems to be the drag for the whole year and understandable given the state of Chinese economy. There is little headline to follow up Tuesday's BoJ meeting but we heard from Nikkei that the Japanese government is raising its long-term interest rate estimate for budget from 1.1% to 1.9%, which seemed to suggest they are forecasting an exit from current policy soon. USD/JPY is trading 0.28% lower at 143.43 with both the U.S. Treasury and JGB yields lower.

Regional and global risk sentiment is positive on Wednesday's Asia session and see the antipodeans supported. The AUD/USD is up 0.16% to 0.6773, NZD/USD 0.13% higher at 0.6279 while USD/CAD rose 0.12%. Elsewhere, EUR/USD is down 0.12% and GBP/USD is down 0.06%.

North American session
The USD fell across the board through the North American session, but without any obvious driver other than a positive equity market picture. While there were some optimistic comments on declining inflation from the Fed’s Barkin, there was only a very modest decline in US yields, so this doesn’t look like the driver. USD/JPY fell a big figure below 144, while AUD/USD gained more than 0.5% to trade up to 0.6770. EUR/USD was up 40 pips at 1.0980.
USD/CAD dropped 50 pips to 1.3340, helped by stronger than expected Canadian CPI data. Headline was unchanged at 3.1% y/y against a market consensus of a drop to 2.9%nd the BoC’s preferred underlying measures were also above expectations, with the exception of common CPI. Nevertheless, CAD strength was only broadly in line with general USD weakness, with Canadian yields only marginally higher. 
US housing starts with a 14.8% rise to 1560k were well above expectations though permits, down 2.5% to 1460k were in line, making the starts ruse look unlikely to be sustained.