Asia Summary and Highlights 15 Jan

Houthis fired an anti-ship cruise missile at a US Navy ship
JGB yields continue to dip with 2yr yields below 0%
Asia Session
Houthis fired an anti-ship cruise missile at a US Navy ship that was hot down by a U.S. fighter jet near the coast of Yemen and has not done any harm. This no doubt further escalates the geopolitical tension in the area as it is hard to see either the Houthis and U.S. to back down from the scenario. While we hope there will be less conflict, risk sentiment will remain on its toes as more U.S. military action will have a domino effect on the global scale. Right now, the market seems to be numb towards such headline and does not see the risk asset being affected and global equity indexes in the green. At the same time, 10yr JGB yields have broken below December low and 2yr yields briefly dipped below 0%, a level last seen in July. The yield differentials once again pressure the JPY and see USD/JPY trading 0.28% higher at 145.28.
The PBoC kept MLF rate at 2.5% and disappointed certain doves looking for a 10bps cut. With commodity prices soft, AUD/USD found little support and is trading 0.04% lower at 0.6683, NZD/USD slipped more by 0.25% lower at 0.6225 while USD/CAD fell by 0.03%. Elsewhere, EUR/USD is 0.14% higher and GBP/USD unchanged.
North American session
The USD fell back sharply through the North American session, responding to weaker than expected PPI data. USD/JPY was the biggest mover, falling a big figure to trade below 144.50, but the AUD and CHF also made strong gains. EUR/USD and GBP/USD gains were more modest, as European yields matched the decline in US yields on the data, with EUR/USD only rising around 30 pips.
US PPI fell 0.1% m/m in December against market expectations of a 0.1% rise, with core similarly below consensus at flat against 0.2%.