Asia Summary and Highlights 23 Jan
BoJ kept rates unchanged at 0.75%
All three items of Japanese CPI moderates in December
Asia Session
All three items of Japanese CPI moderates in December. While the headline show a large degree of moderation, it is mostly from base effect from 2024's energy rebate expiration. However, we do see ex fresh food CPI eases to 2.4% while ex fresh food and energy more stubborn at 2.9%. The BoJ will unlikely change their stance on rates after reading this report. Indeed, the BoJ keep rates unchanged at 0.75% as expected. There is one dissent vote who hopes to increase rate to 1%. Their inflation forecast has been revised higher for ex fresh food an energy to 3% in 2025, 2.2% in 2026 and 2.1% in 2027. GDP has also been revised higher for 2025/26 but lower in 2027. USD/JPY is trading 0.13% higher at 158.53.
Broader risk sentiment is upbeat on Friday. Major equity indexes are all in the green. AUD/USD is trading 0.09% higher while NZD/USD slipped 0.3% after the spike earlier was faded on little expectation of RBNZ turning around. Else, EUR/USD and GBP/USD are down 0.06% and USD/CAD rises 0.03%.
European and North American sessions
With Greenland risks fading EUR/USD moved above 1.17 to touch 1.1750. GBP/USD, after dipping to near 1.34 with some talk of a possible challenge to PM Starmer from Manchester Mayor Burnham rebounded to touch 1.35, with a bounce in EUR/GBP to .8730 from .87 reversing. EUR/CHF was slightly softer near .9280. USD/JPY kept to a 158 handle, slipping back below 158.50 after early gains, but EUR/JPY saw fresh highs above 186. AUD/USD gains extended comfortably above .68 while USD/CAD fell below 1.38.
US data had a limited impact. Initial claims at 200k from 199k were lower than expected. Q3 GDP was revised marginally higher to 4.4% from 4.3% in inventories. Core PCE prices rise by 0.2% in both October and November, while personal spending saw firm gains of 0.5% in both months, outperforming personal income gains of 0.1% in October and 0.3% in November.