Asia Summary and Highlights 14 Dec

Asia Session

USD continue to weakens on Thursday Asia session after the FOMC meeting show a lower dotplot in 2024. U.S. Treasury Yields tread lower across the curve while 10yr JGB yields are trying top close the opening gap. The signal of potentially early rate cut from the fund will accelerate the pace of yield differentials narrowing between the USD and JPY, thus carry trades will loss its attractiveness and led to rewind in previous long USD/JPY positions. Moreover, the Japan's ruling party introduces income tax breaks to alleviate the impact of price hikes and would likely support private investment growth in 2024.  USD/JPY once trade to a session low of 140.94 before bouncing to 141.70 to trade 0.83% lower for the day.

On Thursday, we see the Australian labor report surprised to the upside significantly. The Australia November Employment change is +61.5K with expectation of +11K. While unemployment rate rose 0.1% to 3.9%, it was forced by the much higher participation rate of 67.2%, expected at 66.9%. The higher increase in part time jobs than full time did take the shine a bit from the report but all in all this is a very solid labor report. The AUD/USD is capitalizing on weak USD and strong labor report to trade 0.82% higher at 0.6714, NZD/USD initially dipped on disappointing GDP figure which shows a surprised contraction but managed to rebound to 0.6237 and is trading 1.03% higher, while USD/CAD slipped 0.36% to 1.3469. Elsewhere, EUR/USD is up 0.22% and GBP/USD is up 0.15%.

North American session
The USD fell back after weaker than expected PPI, reversing the gains seen after the CPI on Tuesday. PPI core was flat m/m against a 0.2% rise expected. The JPY and the AUD, which had lost the most on Tuesday, gained the most on the PPI data. 
The FOMC delivered more dovish dots, seeing 75bps of easing in 2024, and fine tined the statement in a more dovish direction in its views on the economy and likelihood of future tightening. This saw the USD fall sharply, a more that extended through Chairman Jerome Powell’s press conference, the market focusing particularly on his comment that when to ease was coming into view. EUR/USD rose from below 1.08 to near 1.09, and USD/JPY fell from near 145 to see lows below 143. GBP/USD rallied a big figure above 1.26. AUD/USD also rallied a big figure, outperforming the CAD as AUD/CAD reached .90.