Asia Summary and Highlights 22 Jan
Australian December 2025 unemployment rate 4.1%
JGB yields moderate across the curve
Asia Session
The December Australian Employment report is a strong beat. Headline employment changes beat estimate at 65.2k while unemployment rate dropped to 4.1% with participation rate unchanged. Overall, this is a red hot report that shows recovery from the disappointment in November. The Aussie jumped higher on the report as market participants speculate such will lead to RBA reviewing their chance of hiking. AUD/USD is trading 0.57% higher at 0.6800. NZD/USD is also trading 0.19% higher while USD/CAD slips 0.05%.
JGB yields continue moderate across the curve and is calming market participants. 10yr JGB yields correct more than 2% while 2/30yr yields once correct more than a percent. It seems the initial panic is over and we begun to see calmer trading. The December trade data for Japan is showing stronger import than export growth, continue to points toward solid domestic demand and softer U.S. demand. USD/JPY is trading 0.29% higher at 158.70. Else, EUR/USD is up 0.02% and GBP/USD is down 0.05%.
North American session
Focus was on Trump’s speech in Davos, ahead of which the USD slipped, with EUR/USD rising to a high of 1.1743 from near 1.17. The speech saw Trump state he would not use force to acquire Greenland, which despite a generally negative tone towards Europe lifted risk appetite and saw the USD reversing earlier losses. Late in the session Trump announced he would not be imposing tariffs on European nations that had been threatened for February 1, having done a deal with NATO Secretary General Rutte, though details remain unclear. This lifted equities and bonds further while EUR/USD slipped to 1.1680 and USD/JPY bounced to 158.50 from near 158. EUR/GBP erased European gains but EUR/CHF advanced to .93 after earlier slipping to .9260. USD/CAD reversed earlier losses to end little changed though AUD/USD managed modest gains despite coming off its highs.
Focus was not on data but December US pending home sales plunged by 9.3% to erase four straight gains. This contrasted strong MBA indices for the week to January 16 released earlier. In a delayed double release, October US construction spending rose by 0.6% after a 0.5% decline in September. Trump also suggested he had decided on his choice for Fed Chair.