Asia Summary and Highlights 15 Feb

Q4 Japan GDP disappoints and bring the Japanese economy into recession
Disappointing labor report shows the strength of Australian labor market begin to fade
Asia Session
On Thursday Asia session, the Q4 Japanese GDP has shown a disappointing -0.4% y/y contraction while it was expected to sprung back to growth of 1.4% y/y. It is contracting slower than the -2.9% in Q3 but still shows a soft private consumption, so as business investment. However, we do not see the poor Q4 GDP to affect BoJ's policy decision and we forecast Q1 2025 GDP to rebound. U.S. Treasury and JGB yields all tread lower and see USD/JPY slipping 0.26% to 150.13.
While the headline Australian employment change for Jan kept its foot in positive territory of 0.5K, the unemployment rate rose to 4.1% from 3.9% so as a huge negative revision in full time employment change from December. It seems to suggest the strength of Australian market maybe seeing a turn after peaking in early 2023 and feeling the effect of cumulative hikes. Yet, this report is very unlikely to change the path of cash rate for CPI remains the key focus. Supported by broadly positive risk sentiment, AUD/USD managed to retraced partial losses to trade 0.04% lower at 0.6488, NZD/USD slipped 0.02% to 0.6084 while USD/CAD rose 0.02% to 1.3542 as oil stay depressed. Elsewhere, EUR/USD is up 0.04% and GBP/USD is up 0.01%.
North American session
The USD lost a little ground against the EUR through a quiet North American session, with EUR/USD rising around 25 pips to 1.0730. Other pairs were steadier, although the USD was generally slightly softer. The exception was USD/CAD, which rose modestly to 1.3550. AUD/CAD advanced to test .88 as AUD/USD advanced to near .65.
There was no significant data, though Fed dove Goolsbee downplayed the importance of January’s strong CPI report which helped equites to see some recovery and UST yields to correct lower from Tuesday’s sharp post-CPI moves.