Asia Summary and Highlights 2 Feb
Risk asset offered
Asia Session
There is renewed weakness in the USD/JPY as we witness another vibrant week opening. Most asset opened lower on a mix of geopolitical risk, potential new Fed chair's policy tilt and the fear sentiment from uncertainty. Yields are also higher in the treasury market. USD/JPY is trading 0.06% higher at 155.27 as risk aversion creeps in and erased early JPY losses.
The January Australian job ads jumped and is fueling speculation of a hike from the RBA on Tuesday. Though this is a positive sign for the Australian labor market, we do not believe that is not sufficient to push the RBA towards an imminent hike. We are seeing a full blown risk asset sell off on Monday, with major equity indexes and commodities in the red. AUD/USD is trading 0.36% lower at 0.6937. NZD/USD is trading 0.29% lower while USD/CAD is trading 0.31% higher. Else, EUR/USD is up 0.04% and GBP/USD is down 0.14%. Most opening gaps has been once closed.
North American session
With former Governor Kevin Warsh confirmed as Trump’s choice for Fed Chair, the USD strengthened, while gold and silver plunged. Equities came under some pressure and UST yields edged lower. USD/JPY rose to 154.65 from 154 while EUR/USD fell to near 1.1850 from 1.1925 with little movement in EUR/GBP or EUR/CHF. AUD/USD found support below .6950 while USD/CAD advanced to 1.36.
US PPI was stronger than expected with a 0.5% December increase, 0.7% ex food and energy. Later the Chicago PMI bounced sharply to 54.0 in January from 42.7. Fed’s Bostic and Musalem argued against further easing while Waller and Miran showed differing reasons for their dovish dissents at the latest meeting, with Waller more concerned about downside labor market risks than Miran. Unchanged November Canadian GDP was weaker than expected, but December saw a preliminary estimate for a 0.1% increase.