Asia Summary and Highlights 6 Feb
Japan December Household Spending -2.9% m/m
Asia Session
The Japan Household Spending contracted by 2.9% m/m in December. It is quite understandable given the current living cost pressure and choppy real wage. Still, it is not a favorable point for the BoJ to see if they would like to further hike rates as it could suggest less sustainable inflationary momentum. JGB yields are lower across the curve to begin the last trading day of the week. USD/JPY is trading 0.23% lower at 156.65.
Risk asset and metal dipped further in early Asia before staging a bounce. There hasn't been any meaningful headline in the session so most likely we are seeing seller's exhaustion and dip buyers having the upper hand for now. However, the risk sentiment does not seem upbeat and may see renewed offers in the coming session. AUD/USD is trading 0.15% higher at 0.6939. NZD/USD is also trading 0.32% higher whille USD/CAD slips 0.12%. Else, EUR/USD is up 0.16% and GBP/USD is up 0.21%.
European and North American sessions
The USD saw modest gains overall after firming into the close, but was particularly strong versus the GBP. Already under pressure given uncertainty over PM Starmer’s future, the GBP slipped after the BoE meeting delivered a surprisingly close vote of 5-4 for steady policy, raising the risk for a move in March. The ECB left rates as expected but did express concern over the risks of EUR appreciation. GBP/USD fell to 1.3540 from 1.3620 while EUR/GBP rose to .87 from .8660. EUR/USD was unable to sustain a move above 1.18 and ended back at its lows near 1.1780.
US data raised concern over labor market weakness, with the Challenger report showing highest layoffs total for January since 2009, and initial claims up to 231k from 209k, though weather may have played a part in this. Later December’s JOLTS report showed a third straight decline in job openings to the lowest level since 2020. UST yields, equities and oil were all weaker but the USD found support after some early North American slippage, USD/JPY returning to the upper half of its range above 157. Late USD gains saw AUD/USD near its .6940 low and USD/CAD near its 1.37 high after spending most of the session in narrow ranges.