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Published: 2023-12-22T06:10:47.000Z

Asia Summary and Highlights 22 Dec

byCephas Kin Long Yung

FX Analyst
-

Japan National Headline, less Fresh food and less fresh food & energy CPI all moderate in November

Asia Session

The Japanese National CPI for November shows further moderation, headline slipped to 2.8% from 3.3%, less Fresh Food reached 2.5%, the lowest level after July 2022 and less fresh food % energy broke 4% to 3.8%. While the moderation is welcoming, it remains above the 2% target with ex fresh food and energy being stubborn near 4%. The BoJ has decided to kick the can down the road till spring's wage negotiation but there is no doubt they will be moving out of ultra-loose monetary policy. USD/JPY has moved 0.24% higher to 142.43 with JGB outperforming U.S. Treasury Yields.

Regional and global equities are performing individually with USD trading broadly stronger. The antipodeans are leading losses with AUD/USD down 0.39% to 0.6776, NZD/USD down 0.26% to 0.6278 while USD/CAD rose 0.06% despite oil gains half a dollar. Elsewhere, EUR/USD is down 0.1% and GBP/USD down a few pips.

 

North American session
The USD lost ground into the US data, which helped extend USD losses though only modestly. Most notable was a downward revision to core PCE prices though dips in UST yields on the data were not sustained. EUR/USD advanced to 1.10 and GBP/USD came close to 1.27. USD/JPY fell to near 142, AUD/USD reached 0.68 while USD/CAD fell below 1.33. 
Initial claims at 205k from 203k remain low in the survey week for December’s non-farm payroll and suggest the labor market remains tight. December’s Philly Fed at -10.5 from -5.9 however looks weak while final Q3 GDP was revised down to a still very strong 4.9% from a preliminary 5.2%. Most importantly core PCE prices at 2.0% annualized saw an unusually large downward revision from 2.3%.
 

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