Asia Summary and Highlights 15 Jan
Donald Trump ordered the Commerce Department and the Office of the United States Trade Representative to negotiate agreements on processed critical minerals
Trump says he spoke with Venezuela’s interim president on oil, minerals and security
BOJ Ueda reiterates sustained wage–price cycle, signals further rate hikes if forecasts hold
Bessent warns on excessive FX volatility in talks with Japan, urges sound communication
Asia Session
Metal is falling on Thursday's Asia session as geopolitical tension somewhat eases on Trump's remark that he spoke with Venezuela’s interim president on oil, minerals and security. It seems to indicate Trump has no intention to directly intervene in Iran with U.S. military. Moreover, he ordered the Commerce Department and the Office of the USTR to negotiate agreements on processed critical minerals. It seems to drive the price of metal significantly lower as it expels the story of Chinese blockade, just for the sake of short term sentiment bids. Along with the fall in metals, AUD/USD fell by 0.05% to 0.6679, NZD/USD is trading 0.17% lower at 0.5738 while USD/CAD rises 0.1%.
We have the usual rhetoric from BoJ Governor Ueda, suggesting more rate hike if forecast hold. He sounds optimistic about the current wage/price setting dynamics, which is the key driver of sustainable inflation growth. The JPY's correction did not gain further momentum on Thursday as we see USD/JPY little changed. USD/JPY is trading unchanged at 158.42, still hovering at recent high. Else, EUR/USD is down 0.05% and GBP/USD is down 0.13%.
North American session
The USD was weaker early in the session but picked up in the afternoon, though closed off its highs little changed. USD/JPY fell as low as 155.10 before moving back above 158.50. EUR/USD ended in mid-range neat 1.1650. EUR/GBP was little changed but EUR/CHF slipped to .9315 from .9330. Equities were under some pressure but the commodity currencies did not move much.
US data had limited impact with a 0.6% rise in November US retail sales with a marginal negative revision to October, and PPI gains of 0.1% in October and 0.2% in November in line with expectations. Later however gains of 5.1% in December existing home sales and 0.3% in October business inventories were stronger than expected, while the Fed’s Beige Book was improved from the three preceding reports. Political risk eased somewhat as Trump suggested that killings had stopped in Iran.