Asia Summary and Highlights 8 Dec

Asia Session

USD/JPY continue to have another volatile session after Ueda's speech on Thursday sparked a JPY rally. USD/JPY has slumped from 147.31 to 141.60 on Thursday before closing at 144.09. We have little headlines from the BoJ on Friday but Japan Q3 GDP came in lower at -0.7% q/q than preliminary data of -0.5% and wage growth accerlerated to 1.5% from 1.2%, yet still below 2%. There seems to be some profit taking earlier in the session that led to a bounce before market participants review their position in the stretched pair. USD/JPY is currently trading 0.29% lower at 143.67 with10yr JGB yields still above the opening gap and U.S. Treasury Yields higher across the curve.

Regional equities are performing mixed while U.S. 3 major equity indexes few points in the green. The AUSD/USD is up 0.19% while NZD/USD is down 0.09%. USD/CAD also slipped by 0.14% as U.S. oil regain the 70 $/b handle. Elsewhere, EUR/USD is down 0.08% and GBP/USD is down 0.02%.

North American session

The JPY continued to gain ground through the North American session, with USD/JPY at one point losing 3.5 figures to trade at 141.60 on a spike lower. It bounced from here, but remained well down on the day near 143.50 – a level broadly consistent with the nominal yield spread correlation that has held for most of the last few years. The USD also lost ground elsewhere, with EUR/USD rising above 1.08 and AUD/USD rallying above 0.66, if in neither case by much. USD/CAD was not much changed, with BoC Deputy Governor Gravelle stressing more progress was needed in reducing inflation. The JPY remained the main driving force.

US data was if anything on the strong side. Initial claims at 220k were spot on expectations and up only marginally from last week's 219k. Continued claims at 1861k were lower than expected and down from last week's 1925k, but still up from 1841k two weeks ago. October consumer credit however saw a weaker than expected rise of $5.1bn.