Asia Summary and Highlights 30 Jan
Biden expected to authorize US military strikes
Regional sentiment in Hong Kong and China remains heavy
Asia Session
On Tuesday Asia session, we saw Japanese December unemployment rate dropping to 2.4%. We also head from Japan's Kishida says will do "everything possible" to bolster household income. He highlighted the importance of wage hikes for the Japanese economics growth, which reinforces the importance of spring wage negotiation. Geopolitical tension persist with Biden expected to authorize US military strikes soon. U.S. Treasury Yields are lower across the curve, so as JGB yields. USD/JPY is trading 0.09% lower at 147.35.
Regional sentiment in Hong Kong and China remains heavy with HSI sinking close to 2%. China announced Suzhou, most populous city in Jiangsu province to remove all home buying restriction as another attempt to prompt up the local market. Yet, domestic demand seems to remain limited by falling wage. The stimulus package and the government rhetoric on financial market not being the focus has dampened sentiment. However, commodity prices are solid with lingering geopolitical tension and lend some support to the Aussie. AUD/USD is trading 0.08% higher, NZD/USD is 0.08% higher at 0.6137 while USD/CAD slipped 0.02% with oil gaining grounds. Else, EUR/USD is down 0.08% and GBP/USD is down 0.03%.
North American session
The USD lost ground in late trade after the U.S. Treasury released its borrowing estimates ahead of the forthcoming quarterly refunding. Q1’s estimate was cut to $760bn from a preliminary estimate of $816bn made three months ago while Q2 was seen as $202bn. UST yields, already lower, extended their decline while equities rose on the announcement.
The USD fell most against the JPY, by around 60 pips to 147.40, around half of the move coming ahead of the Treasury announcement, likely responding to generally lower yields across the board in Europe and the US. EUR/USD, after finding support near 1.08, rose to 1.0830. GBP/USD rose above 1.27 and AUD/USD rose above .66.
Otherwise, EUR/SEK was a little lower, reversing the move up in the European morning, but there was no news of any note. AUD/NZD fell to 1.0770 from 1.0790 after RBNZ Chief Economist Conway said they still had a way to go to get inflation to the target midpoint.