Asia Summary and Highlights 29 Jan
An attack in northeastern Jordan near the Syrian border leaving three US service members dead
Reports that US military preparing to retaliate against drone attack in Jordan
China plans to incorporate 3 of its big managers of bad debts into sovereign wealth fund
China property developer Evergrande faces imminent liquidation
Asia Session
Over the weekend, it is reported that three U.S. soldiers are killed in Jordan from a drone attack launched by Iran-backed militias. The U.S. is reported to planning retaliatory military action and would escalate the tension in the Middle East. Oil and Gold jumped higher at open but oil has retraced most gains and is trying to close the gap. U.S. Treasury Yields are lower across the curve while JGB yields are higher. USD/JPY is trading 0.06% lower at 148.05.
While the key headline over the weekend is no doubt an escalation of geopolitical tension, we also have multiple headlines crossing the wires for the Chinese financial sector. China plans to incorporate 3 of its big managers (Cinda, Orient, Great Wall) of bad debts into sovereign wealth fund, China Investment Corp. They also tightens short selling restrictions. The Hong Kong Court ordered Evergrande's imminent liquidation after months of dragging on. At the end of the day, regional equities are in the green and see the Aussie being supported. The AUD/USD is trading 0.27% higher at 0.6594 as commodity prices are solid on geopolitical tension, NZD/USD is 0.06% higher at 0.6095 while USD/CAD rose 0.03% as oil retraced most of the gap higher. Elsewhere, EUR/USD is 0.11% lower and GBP/USD is unchanged.
North American session
The USD moved slightly firmer through the US session, gaining around 10 pips against both the EUR while USD/JPY edged back above 148 in a quiet session. GBP/USD slipped to near 1.27 as EUR/GBP edged higher. The commodity currencies largely erased gains seen in Europe, though CAD showed more resilience than AUD.
The US data was on the strong side of expectations, supporting the USD gains. December’s 0.3% gain in personal income and 0.2% gain in the core PCE price index were in line with expectations, though the 0.7% rise in personal spending exceeded the consensus. Q4 totals had already been seen with the GDP report. December’s 8.3% increase in pending home sales was well above expectations but consistent with recent signs of revival in the NAHB and MBA surveys, as housing demand responds to lower mortgage rates.