Asia Summary and Highlights 9 January

Asia Open

The November Japan Labor Cash Earning came in strong at 3% y/y, beating estimates and improved from 2.2% in October. It will be supportive for the JPY if BoJ follow through with their tightening. However, the lack of commitment from BoJ will see JPY gains capped. USD/JPY is trading 0.16% lower at 158.08 with U.S. Treasury yields lower and JGB yields erased all opening gains.

The risk sentiment is broadly soft on Thursday. Only the HSI is surviving with being close to unchanged. With USD mostly higher, except against JPY, the Aussie is falling so far in the Asia session. AUD/USD is down 0.26% to test the 0.6200 figure, NZD/USD is down 0.26% to 0.5598 while USD/CAD rose 0.02% as oil slips. Else, EUR/USD is down 0.06% and GBP/USD is down 0.15%.

North American session

The North American started with a sharp slide in the GBP. GBP/USD sliding to 1.2325 from 1.2450 as gilt yields surged reviving memories of the 2022 crisis. EUR/GBP advanced to .8350 from .8290 but EUR/USD slipped to a low of 1.0273 before correcting.  The USD also saw support from Trump suggesting he would declare an economic emergency to justify tariffs. This saw USD/JPY advance to a high of 158.55 and USD/CAD touching above 1.44. 

Dovish comments from Fed’s Waller, downplaying the inflationary risks from tariffs while expecting further easing in 2025, followed by a slightly below consensus 122k rise in December’s ADP employment estimate outweighed a very low initial claims total of 201k. The USD edged off its highs, EUR/USD recovering above 1.03 and GBP/USD above 1.2350. FOMC minutes provided no major surprises, but in signalling a more careful approach to easing gave the USD some support. USD/JPY remained close to 158.50.