Asia Summary and Highlights 8 Jan

Asia Session

The Chinese Wealth Manager "Zhongzhi" had its difficulties earlier in November but has official declared bankruptcy over the weekend. Its heavy linkage with the property development sector has dragged the company into insolvency. It seems to suggest such shadow banking in China may continue to have a shake out if there is no improvement in the property sector. The Chinese and Regional equities sunk on the poor sentiment and see AUD/USD dragged 0.24% lower to 0.67, NZD/USD is also 0.13% lower at 0.6236 while USD/CAD rose 0.13% to 1.3373 as oil slipped more than a dollar as Saudi Aramco is cutting price globally.

USD/JPY was trading higher in the opening hour but as session progress, the sour risk sentiment seems to have attracted bids to the haven JPY. Japanese market are closed today and most will be waiting for Toyko CPI on Tuesday and labor cash earning later to assess the pace of policy change from the BoJ. 10yr JGB yields continue to stay depressed around 0.6% which seems to be limiting current JPY strength. USD/JPY is now trading 0.12% lower at 144.41. Elsewhere, EUR/USD is 0.04% lower and GBP/USD is 0.12% lower.

North American session
The USD had a choppy North American session. It initially gained some ground on the US employment report which as mildly on the strong side of expectations, but failed to hold onto gains, and fell sharply after the ISM services sector data, which came in on the weak side of expectations. However, those sharp losses were largely corrected by the end of the session. Overall the USD was marginally weaker. GBP and AUD led the way. EUR/USD gains were more modest, stalling as 1.10 approached. USD/JPY and USD/CAD saw little net change.
December’s non-farm payroll increase of 216k, 164k private, was on the firm side of consensus but the upside surprise was more than offset by 71k in net downward revisions, mostly in October. Unemployment, unchanged at 3.7%, was lower than expected and average hourly earnings at +0.4% were stronger than expected, but a fall in the workweek hints at economic slowing.
December’s ISM services index of 50.6 from 52.7 is significantly weaker than expected with weakness particularly pronounced in employment, which at 43.3 from 50.7 presents a very different picture from the non-farm payroll, and is likely to be understated.
Canadian employment was almost unchanged in December, weaker than expected, but wage growth accelerated significantly, to 5.7% yr/yr from 5.0%.