Asia Summary and Highlights 5 December
BOJs Nakamura says he is not confident about sustainability of wage growth
Asia Session
BOJs Nakamura says he is not confident about sustainability of wage growth. And he is correct. For the past year, while headline wage growth is spectacular in Japanese terms, small and medium business have been having a hard time in catching up the pace of large enterprise. Early reports are suggesting union asking for another strong wage hike and we believe it will be difficult for small/medium business to follow as the private consumption picture is not bright and is limiting business margin. USD/JPY is holding above 150 at 150.19, down 0.24% for the session.
The October Trade data for Australia has come in stronger than estimate, all items including headline, import and export beats and shows improvement from the previous month. Regional sentiment is off to a rough start while Nikkei leads in gains. The AUD/USD is trading 0.05% higher at 0.6434, NZD/USD is up 0.31% at 0.5868 while USD/CAD is 0.05% higher on lower oil. Else, EUR/USD is up 0.1% and GBP/USD is up 0.05%.
North American session
US ADP employment data with a 146k rise was near consensus and generated little response, but the USD did come under some pressure after the ISM services index slipped significantly to 52.1 from 56.0. USD/JPY, already off highs above 151, fell to near 150 while EUR/USD having bottomed at 1.0473 rallied to a high of 1.0544 and GBP/USD moved above 1.27.
The USD did move off its lows later in the day with Fed Chairman Powell expressing dome caution over easing, USD/JPY moving back above 150.50. The French government’s defeat in a confidence motion was not a surprise, but with Powell’s comments helped move EUR/USD back near 1.05.