Asia Summary and Highlights 18 December

Asia Session

The Australian government is forecasting higher debt, 23 billion worse than May at 117billion Aussie. It cited health, cost of living relief as one of the reasons for such revision. The Aussie seems to have been weighed down by this and see it dropping to new yearly low against the USD at 0.6315, down 0.3% for the session, NZD/USD also dragged 0.27% lower to 0.5738 while USD/CAD rose 0.12% as oil lost a few cents.

Japan November exports came in higher than expected at +3.8% y/y while imports missed estimate at -3.8% y/y. It continue to points toward attractive Japanese goods due to favorable exchange rate and domestic demand remaining weak. The market currently pricing in very little odds for a hike from the BoJ later tomorrow but we believe there is a good chance for them to do a 10bps tightening, given the current inflationary dynamics and trend inflation forecast. USD/JPY is trading 0.05% lower at 153.42 as market brace for any surprise from the BoJ. Major equity indexes are in the green, except Nikkei. U.S. Treasury yields are lower across the curve. Else, EUR/USD is up 0.1% while GBP/USD down 0.1%.

North American session

US retail sales were stronger than expected with a 0.7% rise overall, but were weaker than expected with gains of only 0.2% both ex autos and ex autos and gasoline. Industrial production was weaker than expected with a 0.1% decline. The USD was little changed overall but USD/JPY was dragged down by equities below 153.50 from near 154. EUR/USD kept close to 1.05 but EUR/GBP remained weaker near .8250 while EUR/CHF fell to near .9360.

Canadian CPI was slightly weaker than expected at 1.9% from 2.0% but the BoC’s core rates were on the firm side of consensus. USD/CAD saw little reaction to the data but later pushed above 1.43.