Asia Summary and Highlights 5 Feb
Both Australian December export and Import improves
China Caixin Services PMI for January 52.7 (prior 52.9)
US Central Command said forces conducted strikes on four Houthi cruise missiles
U.S. Treasury Yields opened higher
Asia Session
Over the weekend, US Central Command reported that forces had conducted strikes on four Houthi cruise missiles. Even it does not look like a direct struck to Iran, very likely such tit-for-tat retaliation will further escalate. The December Australian export and import both improves, with import turning to positive territory. At the same time, Chinese Caixin PMI is showing a slower pace of growth than December, 13th month in a row. Regional risk seems to be taking a harder beating than global equities and see AUD/USD dipped to 0.6486 before retracing some gains to trade 0.08% lower for the session at 0.6507, NZD/USD rebounded 0.12% higher at 0.6071 while USD/CAD rose 0.08% despite oil opened higher for USD is trading mostly stronger.
As geopolitical headline crossing the wire, U.S. Treasury Yields jump at the opening with global risk asset perform individually. Powell's interview with 60 minutes were released on Sunday but does not seem to be providing any new information. JGB yields also jumped across the curve. USD initially jumped higher before retracing some of the gains. USD/JPY touched a new yearly high at 148.82 before rotating lower to trade 0.07% higher at 148.42. Elsewhere, EUR/USD is 0.07% lower and GBP/USD is 0.2% lower.
North American session
The USD rose sharply through the North American session on the back of the much stronger than expected January employment report. USD/JPY rose nearly two big figures to 148.50, while the USD rose less sharply against the European currencies with EUR/USD losing one figure to dip below 1.08. Equities advanced despite rising YST yields, but the commodity currencies still fell, AUD/USD to near .65 from around .66. Oil continued to fall.
January’s non-farm payroll increase of 353k with 126k in net upward revisions to November and December was well above consensus and a 0.6% increase in average hourly earnings was an even more striking upside surprise, though possibly influenced by a sharp dip in the workweek to 34.1 from 34.3 hours. Unemployment, unchanged at 3.7%, was lower than expected, while average hourly earnings also saw upward back revisions with December revised to 4.3% yr/yr from 4.1% with January higher still at 4.5%.