Asia Summary and Highlights 12 Jan

Asia Session

Geopolitical conflict once again seize the headline again as the U.S. and UK launched airstrikes against Houthi targets in Yemen while Australia, the Netherlands, Bahrain, and Canada supported. Soon after the airstrike report, the United States Embassy in Iraq was also reported to be bombed, looking like a tit for tat retaliation. The market reaction so far has been muted as we see gold and JPY higher while risk asset tilts negative. USD/JPY is trading 0.14% lower at 145.07 despite U.S. Treasury Yields outperform JGB yields.

The Chinese headline trade balance showed a surplus of  540.9bn (CNY) with both export and import rising. Export rose by 3.8% y/y from 1.7% and import increase by 1.7% y/y from 0.6%. CPI continue to contract y/y by 0.3% but better than 0.4% expected. The stronger than expected Chinese data seems to have outweighed shaky risk sentiment and supported the Antipodeans. AUD/USD is trading 0.17% higher at 0.6699, NZD/USD is trading 0.11% higher at 0.6240 while USD/CAD slipped 0.12% as oil almost up another dollar on geopolitical tension. Elsewhere, EUR/USD is 0.02% stronger and GBP/USD is 0.05% higher.

North American session
The USD gained ground through the North American session, benefiting from a stronger than expected December CPI print along with another fall in continuing jobless claims and still low initial jobless claims. December CPI saw 0.3% rises in both the headline and core measures. Market consensus was 0.2% for headline and 0.3% for core, so the data was only modestly on the strong side. However, the consensus for y/y rates was 3.2% and 3.8% for headline and core, and the outcomes were 3.4% and 3.9% - both above expectations, suggesting a slightly stronger outcome than the m/m data suggested. 
EUR/USD initially spiked higher to 1.10 from 1.0985 before the data, but this was very brief and by the end of the session it had slipped back below 1.0950. AUD/USD saw the biggest decline, falling 1% to 0.6650, helped by a weaker equity market, with the S&P losing nearly 1% after futures briefly spiked above 4800 after the data. But the JPY also underperformed the EUR, with USD/JPY jumping more than half a figure to trade above 146. EUR/JPY briefly traded above 160 before edging back below this level.