Asia Summary and Highlights 8 Feb

Asia Session

The big mover on Thursday's Asia session will be JPY pairs. The pairs jumped on Uchida's "dovish" speech as he does not expect very easy policy to change in a big way. The fact is, no market participants had expected the BoJ to hike rates aggressively with most settling below 0.5% and thus such spike will be short lived. There is nothing new in Uchida's speech, maybe except the BoJ stated there will be communication before policy changes, which wasn't the case for the past two "tweaks". USD/JPY jumped 0.28% higher to 148.58 with U.S. Treasury yields losing less than JGB yields. 

The Chinese CPI missed both m/m and y/y. Looking at the bright side, you will see monthly improvement from 0.1% to 0.3% while y/y sunk to -0.8% from -0.3%. Yet, it does not seem to dim the hopium springing in the Chinese equity market. The Chinese equity market continue to sprout three days in a row before the Lunar New Year holiday, on hope of stimulus from the Chinese government that has been mentioning for a month yet without concrete action. The AUD/USD is well balanced at 0.6521, 0.01% higher for the session. NZD/USD is 0.05% lower while USD/CAD slipped 0.03%. Elsewhere, EUR/USD is 0.09% higher and GBP/USD is unchanged.

North American session

A very quiet North American session saw almost no movement in FX rates, and little in the way of news. USD/JPY reversed an early dip in line with UST yields, while equities advanced. Fed speakers, Kugler Collins and particularly Barkin sounded cautious over easing. BoC minutes detailed concern over inflation, but had little impact. 

December’s US trade deficit of $62.2bn was in line with expectations if slightly wider than November’s $61.9bn, Canada’s December trade deficit of C$0.3bn was however weaker than expected, falling from a November surplus of C$1.06bn. December US consumer credit with a rise of $1.561bn was well below expectations.

European morning sessionThe USD generally edged a little higher through the European morning in quiet trade. GBP was the best performer, with GBP/USD gaining 30 pips and EUR/GBP losing 15 pips, although there was no significant UK news behind the move. USD/JPY edged a little higher to 148.15 after a dip below 148 early on, and the USD was also a tough higher against the AUD, but EUR/USD was little changed around 1.0765.  

The main news was weak German industrial production data for December, which fell a much larger than expected 1.6% m/m, extending the very negative 3m/3m downtrend to close to an annualised 9%. Swedish monetary policy minutes indicated that here was more of a case for easing than in November, but Deputy governor Jansson played down the chance of an easing as early as the March meeting. EUR/SEK was not much changed on the session.