Asia Summary and Highlights 11 Jan
U.S. Steps Up Planning for Possible Action in Iran
Federal prosecutors open probe into Fed chair Powell amid renovation scrutiny
Asia Session
It has proven to be an eventful weekend as we see geopolitical risk and Fed independency on the cards. As Iran protest continues, it seems to see the U.S. began looking into potential scenarios and could flare up geopolitical tension further. And Trump did not stop there, it is reported on late Friday that Federal prosecutors has opened probe into Fed chair Powell amid renovation scrutiny, which Powell calls out to be a witch hunt. While it is not the first time Trump pressuring the Fed to cut rates, it is the first time a likely criminal investigation to be started against the Fed Chair. Gold jumped from these headlines and is seen supporting the Aussie. AUD/USD originally opened a few pips lower on strong USD but have since recovered and further rose to 0.17% higher at 0.6700, NZD/USD is trading 0.28% higher at 0.5747 while USD/CAD slips 0.16%.
It was reported on late Friday that Japan's PM Takaichi is considering calling a snap election. And we have more information on Monday on LDP lawmakers expect possible Lower House dissolution in late January. When asked about it, Takaichi reverted to priority being benefits of economic policy and measures aimed at curbing rising prices for Japanese household. It is worth noting that LDP coalition partner Komeito seems to be against the plan. USD/JPY opened higher and remain trading 0.13% higher at 158.12. Else, EUR/USD is trading 0.3% higher and GBP/USD is up 0.24%.
North American session
US December employment data was mixed. Payrolls rise by a slightly weaker than expected 50k with 76k in negative back month revisions, but unemployment fell to 4.4% with November revised to 4.5% from 4.6%. Average hourly earnings with a 0.3% rise were as expected, but November was revised up to 0.2% from 0.1%. The USD saw some slippage after the data but eventually moved a little higher. EUR/USD at 1.1635 was down only 10 pips from pre-data levels while GBP/USD fell to 1.34 from 1.3420. USD/JPY saw fresh highs above 158 from 157.50 before a modest correction, a report that Japanese PM Takaichi was considering calling a February election assisting the move.
There was no US Supreme Court announcement on tariffs. Wednesday January 14 is the next day for Supreme Court announcements, but it is unclear whether that will include a verdict on tariffs. January’s preliminary Michigan CSI at 54.0 from 52.9 was slightly stronger than expected.
Canada’s employment report with a December rise of 8.2k was slightly stronger than expected but unemployment at 6.8% reversed most of a November decline to 6.5% from October’s 6.9%. USD/CAD rose above 1.39 while AUD/CAD advanced to .93 with AUD/USD edging marginally higher to .6690.