Asia Summary and Highlights 13 Dec

Asia Session

The Kiwi has been beaten down on Wednesday Asia session, triggered by Westpac's downward forecast revision of Q4 CPI. Westpac cuts its New Zealand Q4 CPI forecast to 0.3% from 0.6%, which is read by market participants if such is the case, the RBNZ does not necessarily have to keep rates higher for longer. The down move in the Kiwi is accelerated by sour regional sentiment. New Zealand government also removed full employment goal for Reserve Bank of New Zealand as they promised in election but should have limited impact towards current RBNZ's policy path. The NZD/USD is down by 0.54% to 0.6100, AUD/USD is 0.06% lower at 0.6555 while USD/CAD rose 0.03% to 1.3592 as oil remain soft.

U.S. Treasury Yields are lower on Wednesday Asia session, so as JGB yields while equities are performing individually across the globe. The latest Japanese Tankan Report shows that most Japanese corporate expect CPI to be above 2% in the coming 5 years, which is not only above BoJ's target but also above their forecast. It will be an interesting read and it seems to be aligning with the pricing behavior change of Japanese corporations. USD/JPY is trading a tad higher by 7 pips to 145.51, still consolidating from the sharp drop last Thursday. Elsewhere, EUR/USD is 0.03% lower and GBP/USD is 0.04% lower.

North American session

The USD gained ground through the North American session. EUR/USD only fell around 20 pips to 1.0790 and GBP/USD fell around 20 pips to 1.2560, but USD/JPY gained 45 pips to 145.65,. The AUD, CAD and NOK were the weakest currencies, as the oil price fell over $3 on the day. AUD/USD lost 40 pips to 0.6550, USD/CAD rose half a figure to trade above 1.36, and EUR/NOK rose 8 figures to 11.84.

The US CPI data was the trigger for the general USD gains, with the headline m/m gain of 0.1% above consensus, although the core gains was in line with expectations. Weakness in the oil price was ascribed to concerns about weak demand.