Asia Summary and Highlights 15 Dec
PBoC Fixing the Yuan at their strongest rate since June and Chinese Economic Data Mixed
U.S. Treasury Yields rebound, so as 10yr JGBs
Asia Session
On Friday, the PBoC has fixed the onshore Yuan at the strongest rate since June, seeing both on/offshore Yuan capitalizing it and trades stronger against the USD. It is partially supported by positive but mixed Chinese economics data, which shows industrial surprised to the upside and Retail Sales continue to grow strongly but miss the estimate. It is welcoming data for the Chinese economy, supported the Yuan and indirectly the Aussie. With regional equities on a positive note, the AUD/USD is 0.23% higher at 0.6713, NZD/USD is 0.06% higher while USD/CAD slipped by 0.07% with oil steady.
U.S. Treasury Yields has rebounded in the Asia session across the curve, so as JGBs. All eyes will be on BoJ meeting next week where we do not expect a change in policy but forward guidance instead. A surprise move will put a strong bid behind the JPY for it signals the BoJ is much more hawkish than they present, unless it is well supported by jumping wage that is unlikely to show in Q4. With BoJ exiting ultra-loose policy soon and the Fed tilting dovish, major rationale to stay long USD/JPY seems to be perishing and the correction may continue. USD/JPY is trading 0.13% lower at 141.64. Elsewhere, EUR/USD is unchanged for the session and GBP/USD is down 0.02%.
North American session
EUR/USD and GBP/USD both gained close to 1% through the North American session, as the ECB and BoE both indicated somewhat more hawkish policy stances than the FOMC had on Wednesday. The ECB’s staff forecasts made modest downward revisions to inflation and growth, but Lagarde indicated that these were based on somewhat higher rates than are currently extant, and said that some inflation drivers remained strong. The Bank of England also said rates would remain high for an extended period, and three MPC members continued to vote for a further rate hike.
The USD gained some brief support from weaker than expected jobless claims data and stronger than expected retail sales, but EUR/USD extended gains beyond 1.10. USD/JPY was little changed near 141.60, with AUD/USD also little changed at 0.6715. But USD/CAD fell half a figure to 1.34.